Thu, Jun 20, 2019 - Page 11 News List

Apple asks its suppliers to mull relocation: report

Bloomberg

Apple Inc has asked its largest suppliers to consider the costs of shifting 15 to 30 percent of their output from China to Southeast Asia in a dramatic shake-up of its production chain, the Nikkei reported.

The US tech giant asked “major suppliers” to evaluate the feasibility of such a migration, the newspaper cited multiple sources as saying.

Those included iPhone assemblers Hon Hai Precision Industry Co (鴻海精密), Pegatron Corp (和碩) and Wistron Corp (緯創); MacBook maker Quanta Computer Inc (廣達電腦); iPad maker Compal Electronics Inc (仁寶電腦); and AirPod makers Inventec Corp (英業達), Luxshare-ICT (立訊精密) and GoerTek Inc (歌爾聲學), the Nikkei cited the sources as saying.

China is a crucial cog in Apple’s business, the origin of most of its iPhones and iPads, as well as its largest international market, but US President Donald Trump has threatened Beijing with new tariffs on about US$300 billion of Chinese goods, an act that would escalate tensions while levying a punitive tax on Apple’s most profitable product.

Apple spokeswoman Wei Gu (顧蔚) did not respond to a request for comment, while two major Apple suppliers pushed back against the report.

The US company has not asked for cost estimates for shifting production out of the world’s No. 2 economy, although suppliers are running the numbers on their own given the US-China trade dispute, said one person familiar with the matter, who asked not to be identified discussing internal deliberations.

Another supplier said that it had also not gotten such a request from Apple and that the Cupertino, California-based company had resisted a proposed production shift to Southeast Asia.

Apple does have a backup plan if the US-China trade dispute gets out of hand: Hon Hai last week said that it has enough capacity to make all US-bound iPhones outside of China if necessary.

The Taiwanese contract manufacturer makes most of the smartphones in China and is that nation’s largest private employer.

Hon Hai, known as Foxconn Technology Group (富士康科技集團) internationally, has said that Apple has not given instructions to move production, but it is capable of moving lines elsewhere according to customers’ needs.

Apple has not set a deadline for the suppliers to finalize their business proposals, but is working with them to consider alternative locations, the Nikkei said.

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