Apple Manufacturers Eye Vietnam as Trade War Escalates
Apple Supply Chain Scrambles to Escape US Tariffs
The ongoing trade war between the US and China is causing major disruptions in Apple's manufacturing network. To avoid the hefty tariffs imposed by the US on Chinese goods, Apple's key partners are actively seeking alternative production locations.
Manufacturers Diversifying Production Beyond China
Several prominent Apple suppliers are making plans to shift operations out of China. GoerTek, a Chinese company responsible for assembling Apple's AirPods, has announced its intention to move production to Vietnam. Similarly, Cheng Uei, a Taiwanese manufacturer of iPhone cables and chargers, is exploring relocation options in Taiwan or Southeast Asian countries. Petragon, the second-largest iPhone assembler after Foxconn, is also considering production facilities in Southeast Asia (Vietnam, Thailand, Philippines) or returning to Taiwan.
Expanding Production in Other Regions
Delta Electronics, a supplier of components for iPhones and MacBooks, is focusing on expanding its existing production base in Thailand. They are also planning to establish additional operations in India and Slovakia. Quanta Computer, the manufacturer behind Apple Watches and Macbooks, is prepared to activate non-Chinese production lines to meet demand if the trade war intensifies.
US Companies in China Feel the Sting
A study by China's AmCham reveals significant negative impacts on American businesses operating in China due to the trade war. The survey, involving 430 US companies, found that two-thirds have been adversely affected. Notably, a concerning 30% of these companies are seriously considering leaving China altogether.
Tech Industry Takes a Direct Hit
The high-tech sector is one of the industries bearing the brunt of the trade war's impact. Apple products, including AirPods, Apple Watches, and HomePods, were directly targeted by US tariffs imposed on $200 billion worth of Chinese goods in September.
Overall, Apple's manufacturing network is undergoing a significant transformation as companies strive to mitigate the economic consequences of the US-China trade war. This highlights the broader disruption caused by the trade conflict and its potential to reshape global manufacturing landscapes.
Reference: Vietnam Investment Review
