Apple maintains high rate of manufacturing migration outside China

It would seem that based on the results of last week, it might seem that all the hassle with American tariffs for manufacturers of electronics and components is already behind us, but in the medium term, the corresponding risks remain, and therefore Apple continues to encourage the transfer of production of its products outside of China.

Image Source: Apple

At least, this is what Nikkei Asian Review reports, citing its own sources. For Apple contractors, India, Vietnam, and Thailand remain the main migration destinations outside of China. In terms of iPhone production, the company began demanding that its partners increase production volumes last quarter. However, Indian production capacities are already at maximum capacity, and therefore squeezing anything more out of them is becoming problematic.

Apple expects to assemble at least 50 million iPhones in India this year, and plans to produce the new generation of smartphones for the US market mainly in this South Asian country. MacBook computers and iPad tablets for the US market will be assembled in Vietnam, as Japanese sources have learned.

Apple has asked component suppliers to ship as much product as possible to India and other Southeast Asian countries bordering China to support production expansion. For example, Apple suppliers will have to actively produce printed circuit boards in Thailand and other places outside of China. The company continues to be heavily dependent on suppliers from China, since small items of all kinds are still cheapest to produce in China. To create increased warehouse stocks outside of China, urgent batches of products are sent by air, and Apple is ready to bear the corresponding transportation costs. In Thailand, Apple is looking for new locations to build additional factories for its contractors. Vietnam is also considered one of the most rational alternatives to China when choosing a location for organizing electronics production.

Apple partners face challenges when trying to export equipment from China, as customs officials sometimes block shipments or take long to process paperwork. Chinese authorities are not interested in electronics and component manufacturers migrating to other countries.

It is important to understand that US President Donald Trump’s exemption of Chinese-made electronic devices from retaliatory tariffs maintains the base rate at 20%, so China is still at a disadvantage when supplying any goods to the US. Moreover, the country’s authorities have promised that electronic devices and semiconductor components will eventually be subject to tariffs under separate rules that have yet to be developed. This is what is forcing electronics manufacturers to look for a “backup airfield” outside of China.