After the strict covid-related shutdowns in China, Apple is now moving some iPad production out of China and transferring it to Vietnam.
To guard against future shortages and supply issues, Apple has also asked several component suppliers to stock up, according to the sources cited by Asia Nikkei.
The idea of leaving China and moving its business to Vietnam had been considered before, but due to the sudden increase in COVID-19 cases in Vietnam a few months later, Apple delayed its plans.
Apple’s decision to exit China reflects the company’s ongoing efforts to diversify its supply chain. She also highlights Vietnam’s growing importance to the company.
In particular, Apple is asking suppliers outside of lockdown-affected areas to help build up a few months of component inventory to ensure continuity of supply over the coming months. The requests apply to all of Apple’s product lines – iPhones, iPads, AirPods and MacBooks – according to the sources.
Ideally, the company hopes these suppliers can prepare enough additional components to fully offset the amount manufactured by those in Shanghai and neighboring provinces like Jiangsu, where the risk of supply chain disruption is higher.
India and Vietnam, which are already Apple production sites, are among the countries considered as an alternative to China.
This move by Apple, which is the largest US company by market capitalization, will influence the thinking of other Western companies considering reducing their reliance on China for manufacturing or key materials, following Beijing’s indirect support for Russia’s invasion of Ukraine and closures in some cities to combat COVID-19.
Analysts say more than 90% of Apple products, including iPhones, iPads and MacBook laptops, are made in China by outside contractors.
Responding to Apple’s supply chain challenges in April, chief executive Tim Cook said: “Our supply chain is truly global, so products are made everywhere. We continue to seek to optimize it.”
The lockdowns imposed in Shanghai and other cities as part of China’s anti-Covid policy have disrupted the supply chain of many Western companies.