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TAIPEI – Apple is ramping up production of iPhones, iPads, Macs and other products outside of China, Nikkei Asia has learned, a sign that the tech giant continues to step up production diversification despite the hope that tensions between the United States and China ease under President Joe Biden.
Sources said iPad production will begin in Vietnam as early as the middle of this year, marking the first time that the world’s largest tablet maker will build a significant number of devices outside of China. The California tech giant is also ramping up iPhone production in India, its second-largest production base for the iconic device, sources added, with plans to start producing the latest iPhone 12 series – the the company’s first 5G smartphones – out there ASAP. this trimester.
Apple is also increasing its production capacity of speakers, headphones and smart computers in Southeast Asia as part of its ongoing diversification strategy, the sources added.
In Vietnam, Apple is mobilizing its suppliers to expand the production capacity of the latest HomePod mini, the affordable version of its line of voice-activated smart speakers. The device has been produced in Vietnam since its introduction last year. The Cupertino-based tech giant has already increased local production of its audio products, including its various lines of AirPods, sources said.
Apple has moved some of the production of the Mac mini, one of its desktop computers, to Malaysia, another person familiar with the matter told Nikkei, and the company is also expected to move some of its MacBook production to Vietnam. this year. Most of its IT production remains in China.
“Apple and many other tech companies all want production capacity outside of China, and it hasn’t slowed down even though the United States has a new president,” a supply chain official said. “And they’re not just looking at peripheral products. Apple, for example, is aiming to build capacity in new locations – primarily Southeast Asian countries – for several commodities, such as iPhones, iPads, MacBooks, AirPods, and others. It was hard to imagine that two years ago, but now nothing is impossible to change. “
Apple suppliers are working to meet their customers’ desire for more diverse production bases. Leading supplier Foxconn, officially marketed as Hon Hai Precision Industry, injected $ 270 million to establish a subsidiary in Vietnam late last year as part of the Taiwanese company’s efforts to expand its capacity to production in the country. Luxshare Precision Industry, a new iPhone assembler that is also a key AirPods supplier, is increasing its capacity in northern Vietnam for the HomePod mini to address supply constraints for the popular device, Nikkei has learned.
Apple’s measures are part of a larger trend by global tech giants to reduce their dependence on production from China, long known as the global factory. Rising labor costs in the country, prolonged trade tensions between Washington and Beijing, and the outbreak of the coronavirus pandemic that severely disrupted the supply chain have all highlighted the risks of over-reliance on ‘a country. Additionally, the US government has launched a “supply chain restructuring” campaign and urged technology suppliers to leave China, the Nikkei reported earlier.
China, which has the world’s most sophisticated and comprehensive supply chain, remains a key manufacturing hub for big tech companies, but Apple’s decision to move such a wide range of products out of the country indicates that the technological decoupling of the two countries is likely to continue. in 2021.
And while there are some hopes that the political climate will improve under the new U.S. president, Biden said he will not immediately reverse the tariff policy the Trump administration has implemented against China in the past. mid-2018 – a policy that ultimately resulted in the imposition of tariffs. 360 billion dollars of Chinese imports.
China’s Goertek, a key assembler of Apple AirPods, asked all its suppliers to assess the feasibility of moving production to Vietnam by the end of 2018, and was the first Apple supplier to confirm a plan to transfer the production. In 2019, Apple asked several suppliers to study the financial implications of shifting around 15% to 30% of production out of China for a wide range of product lines. Its AirPods series, which ships around 90 million units per year, entered trial production in Vietnam in the summer of 2019, followed by mass production in 2020. Part of the production of AirPods Pro, AirPods Max and HomePod mini were also allocated to Vietnam last year. Apple started manufacturing the iPhone 11 in India in 2020.
Apple did not respond to Nikkei’s request for comment.
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