Apple has been reported to be interested in moving at least some iPad production to Vietnam since January 2021, but supply chain issues over the past year are said to have delayed the move.
Now, the supply chain disruption caused by lockdown measures in Communist China is reported to have hastened Apple’s desire to move some production out of the country.
According to a Wednesday report from Nikkei Asia, Apple is finally moving some of its iPad production out of Communist China “for the first time ever” and relocating capacity to Vietnam.
It shows how Apple is trying to manage supply to meet demand from consumers and expand manufacturing outside of China, a process it began to accelerate as U.S.-Communist China trade tensions heightened. The iPhone maker already produces some of its AirPods in Vietnam, for example. The shift to move some iPad production to Vietnam may help it boost iPad revenue.
Nikkei Asia said in their report:
“The iPad will become the second major line of Apple products made in the Southeast Asian country, following the AirPods earbud series.”
BYD, a Chinese manufacturer and major supplier of iPads, will soon start producing a small number of tablets in Vietnam, according to the report.
The iPad would be the second major Apple product series to be manufactured in Vietnam after AirPods Pro 2.
More details of this report from Daily Wire:
Hudson Institute senior fellow Thomas Duesterberg told The Daily Wire that “we discovered the hard way over the past two or three years that interruptions to the supply chain” can be devastating to the global economy. He predicted that China’s most recent bout of lockdowns will accelerate the “movement outside of China.”
Indeed, COVID-19 and aggressive lockdown policies may be worsening the slowdown of China’s economy, which averaged nearly 10% growth per year since free market reforms in 1978 until recently, according to data from the World Bank. Beyond the virus, factors such as low labor force growth, slowing productivity, and lackluster returns to investment are dampening the Chinese economy. Growth is forecast to fall to 5% in 2022.
Meanwhile, Vietnam is becoming more important for the supply chains of Apple and other Western firms. Between 2010 and 2020, the Vietnamese manufacturing sector expanded 170% — from $16.7 billion to $45.1 billion, according to the World Bank. A report from Boston Consulting Group shows that members of the Association of Southeast Asian Nations (ASEAN) — which includes other rising industrial powers such as Indonesia and Malaysia — averaged 5% annual growth for manufacturing exports between 2015 and 2019, surpassing the global average of 3%.
Apple also asked suppliers to increase inventory for components in several product lines — including the iPhone, iPad, AirPod, and MacBook — as the company continues to wrestle with logistics hurdles. “Ideally, the company hopes these suppliers can prepare enough additional components to fully offset the amount made by those in Shanghai and nearby provinces such as Jiangsu, where the risk of supply chain disruption is higher,” sources told Nikkei Asia.
Despite the end of Shanghai’s lockdown, the Chinese Communist Party’s Politburo Standing Committee announced intentions last month to “unswervingly adhere to the general policy of ‘dynamic zero-COVID,’ and resolutely fight against any words and acts that distort, doubt or deny our country’s epidemic prevention policies.”
India is also said to be in consideration for Apple, though it would be limited to manufacturing the iPhone for some time.
TF Securities Analyst Ming-Chi Kuo recently pointed out that Apple’s move its production capacity to India involves “potential geopolitical risks,” which is not the case with Vietnam.
Alongside Apple, Samsung has deep production-side integrations within Vietnam that have already helped the company limit some of its supply hurdles to some extent.
Sources: DailyWire, Nikkei Asia, Financial Times
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Author: joe
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