Apple has reportedly accelerated its plans to expand production outside of China due to disruptions caused by the country’s strict COVID-19 measures.
A new report from The Wall Street Journal suggests that the main areas of interest for expansion are India and Vietnam. The company currently has large production bases with its supply chain partners in these countries.
Apple already produces some older iPhone models in facilities in India and Brazil, while its primary assembly partners for AirPods and HomePods products are located in Vietnam. However, China still remains the primary location for the iPhone production, with Foxconn facilities in the country dwarfing the others in scale.
Moving the iPhone production out of China is a complicated process that will take time. The manufacturing infrastructure and large cheap labor force that China offers are difficult to find elsewhere, and it will need to be built up gradually to meet iPhone scale demands.
Nonetheless, Apple is eventually expected to shift up to 40% of iPhone production outside of China to other countries. The Wall Street Journal reports that Apple wants its suppliers to do more new product introduction (NPI) work outside of China to build advanced manufacturing ecosystems in countries like India, but global economic weakness and Apple’s slowing hiring are hindering progress.
In addition to the supply chain effects, Apple’s relationship with China is under increasing scrutiny. The company has been criticized for limiting the availability of AirDrop, a tool that protestors have often used to share information critical of the Chinese government.
The US-China trade wars in 2016 also strained Apple’s dependency on China, although the company managed to navigate the geopolitics relatively unscathed. It has, however, not been as successful in avoiding disruption since the onset of the pandemic.