Pixel Envy

Written by Nick Heer.

Nikkei: Apple Is Diversifying Manufacturing of Core Products

Lauly Li and Cheng Ting-Fang, Nikkei:

Apple is ramping up the production of iPhones, iPads, Macs and other products outside of China, Nikkei Asia has learned, in a sign that the tech giant is continuing to accelerate its production diversification despite hopes that U.S.-China tensions will ease under President Joe Biden.

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Apple’s moves are part of a larger trend of global tech giants reducing their production dependence on China, long known as the world’s factory. The country’s rising labor costs, the prolonged trade tensions between Washington and Beijing and the outbreak of the coronavirus pandemic that severely disrupted the supply chain have all driven home the risks of depending too heavily on one country. The U.S. government, moreover, has initiated a “supply chain restructuring” campaign and urged tech suppliers to move away from China, the Nikkei reported earlier.

The reported scale of this diversification would have been unimaginable just a few years ago.

But it is key to remember that final assembly is the end link of a supply chain that remains dominated by Chinese manufacturers. These moves will certainly help avoid tariffs when finished devices are imported into other countries, but the dependency on Chinese companies further back along the supply chain remains a liability for companies that are also involved in, say, software distribution and original media.