Apple asks suppliers to plan to move production out of China

Foxconn Object


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Apple is working to speed up the movement of part of its supply chain out of China, with supply chain partners warned of plans to increase builds in India. and Vietnam.

China is Apple's choice for many of its core products, but over the years the company has redefined its attitude towards this country. Although the company has long planned to start expanding its production to other territories, it seems that Apple is becoming more active in its intentions.

In a Wall Street Journal report Saturday, Apple “accelerated plans” to move some of its production to another location, according to people who participated in the discussions. The company is now reportedly educating suppliers to “more proactively plan” assembly in other Asian countries, especially India and Vietnam.

The message also appears to include a mention of reducing reliance on Foxconn Technology Group companies.

Due to lockdowns caused by the government's zero-COVID policy, as well as the unrest that took place at Foxconn's troubled Zhengzhou factory, the largest manufacturer of the iPhone Pro model, Apple is more in need of a migration. The mood has been there for quite some time, but with China's image as a manufacturing hub waning in recent years, such as the US-China trade war, Apple wants to try other areas.

It's a difficult prospect, and in September it was estimated that it would take eight years to get just ten percent of production out of China. It already has manufacturing centers that are expanding in Vietnam and India, but much more needs to be built to make larger shifts more efficient.

One element is New Product Introduction, a process in which Apple teams work with contractors to transform product drawings and prototypes into a full production plan. In China, with a dense concentration of suppliers and available NPI process engineers, it's easy for Apple.

In order to expand into other countries, Apple must extend the NPI process to them. However, with the hiring slowdown and the slowing global economy, it is becoming increasingly difficult for Apple to assign workers to work with NPI with new suppliers in new countries, the sources say.

Apple has a long-term goal of shipping 40% to 45% of its iPhones from India, compared to current single digit levels. Meanwhile, Vietnam is expected to expand production of other product lines such as AirPods, Apple Watch and MacBook models.

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