There is added information related to Apple’s likely intent to shift some of its iPhone and other consumer electronics manufacturing. In our last blog posting, we highlighted electronics contract manufacturing services provider Foxconn’s disclosure of changed production sourcing readiness awaiting an Apple decision.

Earlier this week, Nikkei Asian Review reported (Paid subscription or free metered view) that Apple has indeed requested major suppliers to evaluate the cost implications for shifting 15 to as much as 30 percent of production capacity from China to other Southeast Asia regions. iPhoneX

Citing multiple informed sources, the publication indicates that even if United States and China trade tensions are temporarily resolved, there will be no turning back. The report specifically cites Apple iPhone contract manufacturing assemblers Foxconn, Pegatron, Wistron, MacBook producer Quantra Computer, AirPods producer Inventec, each being asked to evaluate alternative sourcing cost factors.

In other words, Apple is likely engaged in strategic supply network risk mitigation given its heavily reliance on China based manufacturing.

The Nikkei report validates supplier’s admissions that replicating Apple’s final assembly and supply network capabilities beyond China will take additional time, and China is likely to remain an important focus in the near-term.

With upwards of 20 percent of global revenues originating in China, Apple CEO Tim Cook must cautiously evaluate the political impacts related to upwards of five million Chinese jobs and the Trump Administration’s ongoing added pressures being placed on both U.S. and Chinese based high tech electronics providers. Reportedly, Cook met personally with President Trump last week.

There appears to be no indications that Apple is considering any added U.S. based manufacturing capability.

Also citing informed sources, a separate published report by The Wall Street Journal indicates that Apple has accelerated production and shipment of products for stockpiling prior to the threatened next round of U.S. import tariffs on most all China manufactured products.

At this point, production of the newest models of iPhones typically begins in the July thru September period, and is likely that such models may remain sourced in China despite a potential tariff impact for models destined to the U.S. market.

While principle contract manufacturer Foxconn has previously indicated plans to produce current versions of iPhones in India, it is unlikely that there will be readiness for any significant volume.

 

 

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