The U.S./China trade war continues to send ripples of concern throughout large corporations, and Apple is no exception. Apple’s production system is based almost entirely in China, and is particularly vulnerable to the recent rounds of tariffs on Chinese-produced products.
Nikkei reports Apple is in the early stages of a ‘fundamental restructuring’ of its supply chain, and has asked its major suppliers to evaluate the costs of shifting 15% to 30% of their production capacity from China to Southeast Asia.
The report indicates that Apple is likely to continue with its plans to move at least part of its device production out of China, even if the United States and China resolve their trade issues.
While the move to diversify production was triggered by the U.S./China trade war, it understands that the long-term risks of production in China aren’t 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 from Chinese soil could take up to three years for any meaningful change in output. Apple is said to be discussing potential moves with suppliers, while initiating discussions with governments regarding potential subsidies.
Nikkei says Apple has told iPhone assembly partners such as Foxconn, Pegatron, and Wistron to evaluate moving their production.