Apple Considers Moving Some Production Outside China

Apple has said to its contract manufacturers that it intends to expand production outside China. India and Vietnam, where Apple already has production sites, are among the countries shortlisted by the company as alternatives.

Last month, Apple announced that it expected bigger supply problems as COVID-19 lockdowns slowed production and demand in China.

Beijing’s strict zero covid policy has been a major factor affecting Apple’s decision to move some production outside China.

Over 90% of Apple products like iPhones, iPads and MacBooks are manufactured in China by contractors.

The tech giant has already started discussions with some of its contractors to potentially move some production outside China, after the company was exposed to manufacturing snags due to China’s zero-Covid policy.

Lockdowns in Shanghai and Kunshan have forced Apple to halt production at three suppliers, which could have a much more significant impact, especially the Pegatron shutdown.

Pegatron, which roughly makes 20 to 30 per cent of all iPhones, had said in April that operations at its two production sites in Shanghai and Kunshan have been suspended to comply with government regulations.

Similarly, MacBook maker Quanta and iPad assembler Compal are the two other suppliers who also had to close doors to comply with the Covid guidelines.

In Shanghai, 31 companies run production facilities that supply to Apple.

Moreover, the Shanghai lockdown made a huge dent in Apple’s revenue for the April-June quarter as the company has indicated up to $8 billion loss in sales.

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