Apple out of China – Al Madinah Newspaper

The American company Apple has accelerated its plans to move part of its production lines outside of China, the Wall Street Journal reported, citing people familiar with the matter.

These people said the company has advised its suppliers to more actively plan to assemble Apple products in other Asian countries such as India and Vietnam. According to the newspaper, recent unrest in the Chinese city of Zhengzhou, known as “iPhone City”, prompted Apple to make the change. At a giant factory in Zhengzhou, China, up to 300,000 workers work in a Foxconn-run facility that makes iPhones and other Apple products.

At one point, iPhone City alone made about 85 percent of the iPhone Pro lineup, according to market research firm Counterpoint Research. The Zhengzhou factory was hit by violent protests in late November.

In videos posted online, workers unhappy with wages and COVID-19 restrictions can be seen throwing things and shouting “stand up for your rights”.

The videos also show that riot police were present at the site, and The Wall Street Journal confirmed the events shown in the videos with workers at the site.

After events eroded China’s position as a stable manufacturing hub, the disruption means Apple may no longer feel comfortable with much of its business in one place, according to analysts and people in the supply chain of the company.

China’s COVID-19 policy “has been a huge blow to Apple’s supply chain,” said Wedbush Securities analyst Daniel Ives. “Last month was the straw that broke the camel for Apple in China,” he added.

Longer-term, Apple aims to ship 40 to 45 percent of iPhones to India, compared to a small percentage currently in the Asian country, said Mingchi Kuo, an analyst at TF International Securities, who is interested in supply chains. The US giant is also looking to produce other products like AirPods, smart watches and laptops in Vietnam, according to the newspaper.

Kuo, a supply chain analyst, said iPhone shipments in the fourth quarter of this year are likely to reach about 70 to 75 million units, still about 10 million less than market forecasts before the Zhengzhou turmoil. He said the top-of-the-line iPhone 14 Pro and iPhone 14 Pro Max models were hit particularly hard. He added that the plant was operating at about 20% of its capacity in November, a figure that is expected to improve to 30 or 40% in December.

Apple and China have spent decades bonding together in a mutually beneficial relationship, with the US company benefiting from the availability of a skilled workforce and lower costs than in the US. But the Wall Street Journal confirms that the change will not happen overnight. “Finding all the parts that will be produced at the scale Apple needs isn’t easy,” said Kate Whitehead, a former Apple COO who now owns her own supply chain consulting firm.