Apple to gauge cost implications for moving some production from China

By Akshay Kedari  | Date: 2019-06-21

Apple to gauge cost implications for moving some production from China

China is a major market for Apple as it secured 18% of its total revenue from the country in last quarter

Technology giant Apple has reportedly been preparing to restructure its supply chain and has requested its key suppliers to evaluate the implications and cost of shifting around 15 to 30% of production capacity from China to Southeast Asia.

Citing multiple sources, unresolved dispute over the Sino-U.S. trade has led to the company’s request, however, a trade resolution now shall not alter the decision of the company.

Apparently, there is a great risk for the iPhone maker for heavily depending on manufacturing in China. Fitch, a credit rating agency, said that Dell Technologies Inc., HP Inc and Apple are the companies who have a higher probability to be blacklisted by China in retaliation for the restrictions imposed on Huawei.

According to reliable sources, companies like Foxconn, Wistron Corp and Pegatron Corp that are key iPhone assemblers, Compal Electronics Inc. that makes iPad and Luxshare-ICT, Goertek and Inventec Corp that make AirPods have reportedly been asked to look for options outside of China.

India, Indonesia, Vietnam, Malaysia and Mexico are the few companies that are being considered, out of which Vietnam and India are among the favorites for smartphones, sources indicated.

Wedbush Securities’ analysts said that Apple could move 5%-7% of its iPhone productions to India by next 12-18 months. Considering the complexity and logistics involved, a minimum of 2-3 years would be required for 15% of iPhone production to move from China to other regions.

Seemingly, China is a major market as well as vital production center for Apple and its devices. The company reportedly gathered nearly 18% of its total revenue from China during the quarter ended March.

Sources said a group of over 30 people have been dispersed from Apple’s capital studies team to negotiate plans for production with the governments and the suppliers over the monetary incentives which could be offered to lure Apple manufacturers.

 

Source credit- https://www.reuters.com/article/us-apple-china-restructuring/apple-explores-moving-15-30-of-production-capacity-from-china-nikkei-idUSKCN1TK0XN

About Author

Akshay Kedari     aeresearch.net

Akshay Kedari

A qualified computer engineering graduate, Akshay Kedari takes pride in having his way with words. Following his passion for content creation, he writes insightful pieces on aeresearch.net and a few other portals. Also endorsed with a short-term experience in web deve...

Read More

More News By Akshay Kedari

McDonald’s to leave Russia after 30 years amidst Ukraine’s invasion

McDonald’s to leave Russia after 30 years amidst Ukraine’s invasion

By Akshay Kedari

After Ukraine’s invasion, multinational fast-food giant McDonald's Corp. is reportedly planning to sell all its restaurants in Russia, pulling operations from the nation after 30 years. The world's biggest fast-food chain closed 847 ...

Berlin’s GetHenry bags USD 17.4 Mn seed funding for business expansion

Berlin’s GetHenry bags USD 17.4 Mn seed funding for business expansion

By Akshay Kedari

GetHenry, a Berlin-based company that offers couriers and logistics organizations electric last-mile delivery bikes, has reportedly raised USD 17.4 million seed round to grow its operations across Europe. The latest investment round was led by LocalG...

Ferrari to equip the upcoming Purosangue with its trademark V12 engine

Ferrari to equip the upcoming Purosangue with its trademark V12 engine

By Akshay Kedari

Italian luxury sports car manufacturer Ferrari S.p.A. will equip its much-awaited Purosangue SUV with a 12-cylinder engine, as it focused more on fuel-efficient models. Confirming the news, Ferrari Chief Executive Benedetto Vigna claimed that the com...

White House to spend USD 3 billion on EV battery manufacturing in U.S.

White House to spend USD 3 billion on EV battery manufacturing in U.S.

By Akshay Kedari

According to reliable sources, the Biden administration is planning to provide USD 3 billion in finance to reinforce EV battery manufacturing capabilities in the United States. The apparent funds will be issued by the Department of Energy from Presid...

Telefonica eyeing Israel’s high-tech sector to improve its portfolio

Telefonica eyeing Israel’s high-tech sector to improve its portfolio

By Akshay Kedari

Telefonica S.A. is planning to increase its investments in Israel’s high-tech sector this year, a senior official reported recently. The company, which is Europe’s third-largest telecommunications company, is also eyeing the country&rsquo...