Apple wants to move its manufacturing out of China (2024)

FAQs

Apple wants to move its manufacturing out of China? ›

Apple is looking to move its production outside of China in order to diversify its supply chain. We may earn a commission from links on this page. Apple supplier Foxconn announced the creation of a major new factory in Vietnam and a $300 million investment to expand its current operations in the country.

It cost Apple an estimated $1 billion per week. Since then, Apple has reportedly told its manufacturing partners that it wants to do more business outside of China. Apple's main supplier, the Taiwan based Foxconn has been moving more of its production out of China into India.

As relations between the U.S. and China have soured, Apple has worked to diversify its supply chain by expanding production in countries like Vietnam and India. It's a big shift for the iPhone maker, which has historically relied on China for manufacturing.

Intel, Microsoft, Nike, and Dell have all recently signaled their intention to move some of their manufacturing out of China to different shores.

It's not about the cost aspect - admittedly, the indicia are that it probably costs about $8 to $10 in labor per phone. It's about the plant, and the skilled labor. The US no longer has any of the necessary manufacturing plant for volume microelectronics assembly or test, and doesn't have the workforce to back it.

Data shows that while manufacturing activity for end products has been moving out of China, supply chains haven't decoupled from the country.

September 2021 – U.S.-Based Apple Manufacturers On the Rise

It is reported that, as of September 2021, 48 of Apple's 180+ suppliers have U.S. manufacturing sites, an increase of 25 from the previous year. Over 30 of these manufacturing sites are in California.

Still, analysts told CNBC the iPhone-maker's dependency on China will remain for years to come. There's potential for India to “become the next China” for Apple production, but it could take as long as a decade before it happens, said Martin Yang, senior analyst of emerging technologies at Oppenheimer & Co.

China is a very important market for Apple, accounting for almost 20 percent of the company's total sales.

Increasing competition in the Chinese smartphone market is a big concern for Apple, given the company's China iPhones sales hit $20.8 billion last year, a sizable chunk of their total phone sales of $69.7 billion.

Why are US companies leaving China? ›

Boards and companies are reevaluating their risks and reviewing mitigation strategies. This trend is being driven by a number of factors, including rising labor costs in China, the ongoing trade war between the United States and China, and concerns about China's political and economic stability.

Which Countries Might Be the Next Main Manufacturer of Goods? As China moves on from low-end goods manufacturing, businesses should begin looking towards up-and-coming countries like Vietnam, Bangladesh, and Mexico to become their primary manufacturers.

Volvo, Motorola, Smithfield Foods, and AMC are all owned by Chinese companies but I defy you to both claim that you knew this and to point out any indicators on their websites of this. These are examples of Chinese owned companies that look as American as apple pie to the outside world.

IHS estimates that moving assembly to the US would at least double the manufacturing costs of the iPhone. That estimate doesn't include the overhead costs and markup those manufacturers ultimately charge Apple, or what Apple charges consumers.

The New York Times: It isn't just labor is cheaper abroad. Apple's executives believe the vast scale of overseas factories as well as the flexibility, and skills of foreign workers have outpaced Americans.

Answer and Explanation: 1. Benefits of outsourcing, not solely for Apple, but in general, include less cost and cheaper raw materials. The cost of labor per hour in China is lower than in the United States; hence, Apple can lower its production cost.

Bloomberg Intelligence estimates it could take eight years to move just 10% of Apple's capacity outside of China. The GoerTek executive argues it'll be far quicker. Most Chinese tech manufacturers are experiencing the same pressure. “I would say currently 90% of them, they're looking at that,” he added.

Apple has also chosen India as its site for a manufacturing stage for lower-end iPhones to be sold in 2025. In this stage, known as new product introduction, Apple's teams work with contractors in translating product blueprints and prototypes into a detailed manufacturing plan.

Nike, Adidas and Samsung have all increased operations in Vietnam, and companies that produce solar panels are moving their production to Thailand. Malaysia, Bangladesh, Cambodia and the Philippines are also proving popular among apparel companies like Gap, Inc.