According to a report by Nikkei Asia, Apple plans to relocate some MacBook manufactures to Vietnam for the first time in 2023.
In the midst of rising tech tensions between Washington and Beijing, the U.S. tech industry is continuing to shift its production base away from China. The decision underlines the tech giant’s efforts to diversify its manufacturing operations away from China as it struggles with rising trade tensions between the United States and China. They continue to struggle with supply chain disruptions brought on primarily by COVID-19 lockdowns, causing riots and discourse among workers.
The issues began in October this year when employees abandoned the industrial campus in Zhengzhou, the capital of the central province of Henan, because of concerns from COVID-19. In order to entice workers to return, bonuses were offered. The newly hired personnel, however, claimed that management had broken their commitments, which led to protests and a surge in unemployment.
Nothing can be done to stop Apple and Foxconn from being affected by China’s COVID laws, according to analyst Amir Anvarzadeh of Asymmetric Advisors, which is what eventually pushed the business to alternate their manufacturing destination to Vietnam. “It will force Apple to accelerate the diversification of its production base,” he said. According to Nikkei Asia, the company’s assembly partner Foxconn may start producing MacBooks there as early as May.]
According to the article, Apple produces 20 to 24 million MacBooks annually, with production centres located in the Chinese towns of Chengdu, in the Sichuan region, and Shanghai. In addition to escalating geopolitical tensions, the move to Vietnam also coincides with production interruptions brought on by China’s zero-COVID rules and uncertainties resulting from their unexpected “loosening” in recent weeks.
Since former U.S. President Donald Trump launched a tariff war against China, major electronics manufacturers including Apple, HP, Dell, Google, and Meta have all announced plans to move production and sourcing away from the nation. The majority of servers for U.S. data centres produced for companies like Google, Meta, Amazon, and Microsoft, for instance, are now produced in Taiwan, Mexico, or Thailand.
An executive at Inventec, a significant supplier to HP and Dell, stated that “Overall, China’s benefits in terms of low-cost manufacturing are fading and many U.S. clients now want some production location alternatives outside of China,” they continue, “This is already an accelerating trend for almost all global brands, and it will not likely change going forward.”
The supply chain has been difficult for Apple to manage this year, and it now appears that it may have a bigger effect than initially thought. The unrest in China will almost certainly have an impact on Apple’s December quarter earnings, which historically have the highest profit margins of the year thanks to the holiday shopping season. Although it is yet unclear whether this would negatively affect Apple in the future, the holiday season is undoubtedly looking bleak for the business.