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Apple to move its production units outside China: Here’s why

Recently, Apple Inc. has fastened its plans to shift some of its production units outside China. China has been an integral nation in the supply chain, providing a reputation as the World’s largest smartphone manufacturing company.

Apple has already declared the suppliers to plan more actively for assembling Apple products in other parts of Asia. The company mentioned that the focus has been shifted to India and Vietnam. This will reduce the dependence on the Taiwanese assemblers owned by the Foxconn Technology Group.

But, what has resulted in the massive change in the decision? The main factor is the turmoil at the iPhone City. It is a giant city in China, and as many as 300,000 workers work at the factory operated by Foxconn to make iPhones and other Apple products.

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The city is the largest manufacturer of iPhones, and the total supply of iPhones accounted for 85 percent lineup of iPhones conducted by market research.

The Zhenzhou factory was involved in the outbreak of violent protests during the last months. Many videos were posted online, which showed that many workers were disturbed by the wages and covid-19 restrictions. The workers were throwing things and chanting the slogan “ Stand up for your rights.”

The protests turned out to be severe that the riot police had to interfere to calm down the situation.
China’s status as a stable manufacturing center has been weakened by many events over the last year. The turmoil implies that Apple is no longer confident to set up its manufacturing units in China. This has been revealed by the analysts and the workers involved in the Apple supply chain.

Alan Yeung, a former U.S. executive working at Foxconn stated that People did not use to pay much attention to the concentration risks in previous times. Previously, free trade was on the rise, and things were much more predictable. But, now the world has changed.

One response from the workers has mentioned that the people involved in Apple’s supply chain are to draw from a bigger part of the assemblies- even though the companies are based in China.

Two companies have tried to receive more Apple businesses such as Luxshare Precision Industry Co. and Wingtech Technology Co.

When the concerned officials talked with Luxshare Precision Industry, they mentioned that they are concerned about the turmoil that would take place of the covid preventative measures adopted in the country, power shortages, and other issues. They have revealed that the clients have requested the company to do more business outside China.

The executives have mentioned new product information when Apple assigns teams to work with contractors to translate the product’s blueprints and prototypes into a new manufacturing action.
China has emerged as the leading assembler of Apple products because it is the leading sphere of production engineers and suppliers.

Apple has already mentioned to its manufacturing partners that they want to start doing more work outside China.

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Places like Vietnam and India should be involved in NPI. Otherwise, these countries will remain the second option for Apple as mentioned by the supply chain specialists.

But the global recession has been a drawback for Apple, where the delayed hiring processes have made it difficult for the tech giant to allocate the NPI to collaborate with new suppliers and new regions.

The sudden shift in Apple’s production units:

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Apple and China have tried their best to remain in a mutualistic framework, and the association has proved to be beneficial for the two parties. The extensive change will not come overnight. Apple releases new products every year, providing updates on its older products.

Kate Whitehead, the former operations manager has mentioned that finding a single platform that serves all the purposes will not be easy.

Yet the transition is progressing mainly attributed to the causes that are proving to be threatening to China’s economic condition.

Chinese youth have backed out from the concept of working at an assembling unit for a minimum wage.
Three years after the Covid-19 pandemic started, China is still trying to crush the outbreaks through preventative measures such as zero covid approaches. On the other hand, many other countries have returned to pre-pandemic forms.

Protests in China have been taking place during which demonstrators criticized the lockdown approach by President Xi Jinping.

This has been backed by five years of increased U.S China military tensions and economic tensions caused by the Trump and Biden administrations.

Apple’s long-term goal is to manufacture 40 to 45 percent of iPhones in India. Currently, India has been manufacturing units in single numbers according to an analyst in TF International Securities who follow the supply chain.

The suppliers have mentioned that Vietnam is expected to contribute to the manufacturing of the Apple products such as AirPods, smartwatches, and laptops.

The turmoils in China have caused users to wait for the longest time to purchase the high-end models Apple. Apple issued a warning in the mid of November stating that the shipments of the pro model would be damaged by the covid-19 restrictions in China.

Nevertheless, Apple has to shift to replacements to replace iPhone city. They have to spread it around other cities and make more villages instead of big cities.

Edited by Prakriti Arora

See also  Focusing on protecting people, health of population remain a priority for India: IMF

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