Report: Apple talking with supply chain to investigate moving 30% of production out of China

The US/Chinese trade war has sent ripples of concern throughout big corporations. Apple has relied almost exclusively on Chinese manufacturing and assembly for its product lines for many years, and has been particularly exposed to the recent rounds of tariffs on Chinese exports.

Nikkei reports that Apple is talking with suppliers and is in early stages of a ‘fundamental restructuring’ of its supply chain. Apple has reportedly asked suppliers to price up the cost of moving 15-30% of production out of China.

Nikkei says that Apple is likely to continue with the partial exodus even if the United States and China resolves their differences. It says Apple’s interest in diversification was triggered by the recent trade war but it has identified that the long-termrisks of production are not going away.

“A lower birthrate, higher labor costs and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere,” said one executive with knowledge of the situation. “With or without the final round of the $300 billion tariff, Apple is following the big trend [to diversify production],” giving itself more flexibility, the person added.

Shifting production on the scale of Apple’s takes time and it could take three years for any meaningful change in output. The report says Apple employees in the ‘capital expense studies’ department are discussing potential options with suppliers and opening negotiations with governments regarding potential subsidies.

Nikkei says Apple has asked iPhone assembly plants like Foxconn, Pegatron and Wistron to evaluate moving production as well as Quanta, Compal and Inventec (manufacturers of iPads, MacBooks and AirPods).

iPhone production has expanded beyond China over the last few years with some manufacturing popping up in Brazil and India. For its part, Apple presents its production as a global supply chain with component parts of an iPhone coming from all over the world. That being said, the vast majority of iPhone assembly happens in China factories like Foxconn.

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