Apple is reviewing its supply chain amid an escalating trade war between the U.S. and China, and is considering shifting some of its production from China--where 90% of Apple products are manufactured--to other countries.
Nikkei reports Apple has asked major suppliers to explore the costs of shifting 15%-30% of their production capacity from China to other countries, including those in Southeast Asia and Mexico. The company has asked iPhone assemblers Foxconn, Pegatron, Wistron, MacBook maker Quanta Computer, iPad maker Compal Electronics, and AirPods makers Inventec, Luxshare-ICT and Goertek to explore options outside of China, according to Nikkei’s report.
The news arrives as U.S. trade representative Robert Lighthizer told the Senate Finance Committee on Tuesday that the U.S. is ready to place more tariffs on China if it can't agree to a new trade deal, according to a report from ABC. President Donald Trump placed tariffs on $250 billion of Chinese goods earlier this year, and has announced plans for an additional $300 billion in tariffs are on the table.
The protracted trade dispute between the two countries has caused Apple to re-evaluate its reliance on China in its production as risky, and the company is looking for ways to diversify its supply chain.
“With or without the final round of the $300 billion tariff, Apple is following the big trend [to diversify production],” an unnamed source told Nikkei. The process of moving nearly a third of Apple’s production capacity to other countries is expected to take up to three years.
Apple claims it has brought nearly 5 million jobs to China, including 1.8 million software and iOS App developers. Suppliers are considering locations in Mexico, India, Vietnam, Indonesia and Malaysia to move production.