Apple Inc’s Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to pre-empt fallout from escalating Beijing-Washington tensions, one of the US company’s most important partners said.
AirPods maker GoerTek Inc (歌爾聲學) is one of the many manufacturers exploring locations beyond its native China, which today cranks out the bulk of the world’s gadgets from iPhones to Sony Corp’s PlayStations.
GoerTek is investing an initial US$280 million in a new Vietnam plant, while considering an India expansion, deputy chairman Kazuyoshi Yoshinaga said in an interview.
US technology companies in particular have been pushing hard for manufacturers such as GoerTek to explore alternative locations, said the executive, who oversees GoerTek’s Vietnamese operations from northern Bac Ninh Province.
“Starting from last month, so many people from the client side are visiting us almost every day,” Yoshinaga said from his offices at GoerTek’s sprawling industrial complex north of Hanoi.
The topic that dominates discussions: “When can you move out?”
The expanding conflict between the US and China, which began with a trade dispute, but has since expanded to encompass sweeping bans on the exchange of chips and capital, is spurring a rethink of the electronics industry’s decades-old supply chain.
The US giant has been careful to avoid suggestions it might reduce its investment in China, where it has built an ecosystem centered on companies such as GoerTek and Foxconn Technology Group (富士康科技集團), which collectively employ millions.
Taiwan-based Hon Hai Precision Industry Co (鴻海精密) is known internationally as Foxconn.
While Bloomberg Intelligence estimates it could take eight years to move just 10 percent of Apple’s capacity outside of China, the GoerTek executive said it would happen far quicker.
Most Chinese tech manufacturers are experiencing the same pressure.
“I would say currently 90 percent of them, they’re looking at that,” he added. “It’s the brand companies’ decisions.”
India is high on clients’ wish lists — a reflection of its potential both as a market and a manufacturing base.
“We get requests from our clients almost every month. ‘Do you have any plans to expand to India?’” Yoshinaga said. “If they decide to build up the production lines in India, we may have to think about it seriously.”
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