A new report from Bloomberg reveals several Apple component suppliers are looking to expand their production capacity outside mainland China. Wistron, Foxconn, Inventec, and Pegatron are all looking to expand their supply lines outside of the Sino region with some urgency. The one-two punch of the U.S. China trade war and the coronavirus pandemic has motivated the change.
Wistron Accelerates Supply Chain Diversification Plans
Earlier this week, Wistron announced plans to establish half of its production capacity outside China within a year. The Taiwanese corporation’s efforts to move its supply chain beyond the Sino region aren’t new; it’s setting up a second facility in India right now. The firm has also set aside $1 billion to build new factories in the Southeast Asian republic, Mexico, and Vietnam.
The company probably began looking to expand outside the world’s largest smartphone manufacturing hub last year.
In June 2019, Apple reportedly asked the firm and some of its other component vendors to investigate relocating 15 to 30 percent of their supply chains out of China. Apple wanted to lower its dependence on Sino manufacturing because of the problems it had during the trade war. Since Wistron makes integrated circuit boards and older iPhones for the Big Tech firm, it had a significant incentive to comply.
The COVID-19 outbreak’s massive disruption of China’s production hubs and transportation infrastructure likely only accelerated and expanded its diversification plans.
Foxconn, Inventec, and Pegatron also Looking Beyond China
Crucial Apple suppliers Foxconn, Pegatron, and Inventec are also in the process of diversifying their supply chains.
Taipei-based multinational Foxconn assembles most of the world’s iPhones, a task it long carried out in its sprawling Chinese plants. But last April, the firm decided to start mass-producing the popular handset in its Indian plants. The corporation’s founder Terry Gou also asked the Silicon Valley giant to relocate its supply chain to Taiwan amid a significant trade war flare-up.
In addition, Foxconn head Young Liu stated his company could make all of Apple’s iPhones outside the Sino region. Even though 75 percent of its production capacity is based in China, the manufacturer has no issue with a paradigm shift.
Pegatron, another Taiwanese component maker, recently told Bloomberg it had made arrangements to build a new facility in its home country. The firm also opened a new factory in Indonesia last year and wants to develop production capacity in Vietnam in 2021. Similarly, Air Pod manufacturer Inventec recently said it’s in the process of establishing a new plant in the Socialist Republic.
Apple requested all three above-listed vendors look into moving their supply chains outside of the Chinese mainland last year.
Notably, Samsung, as well as Google and Microsoft, are moving their production capacity outside of the Sino superpower. If more electronics companies push for diversified supply chains, the global component industry could become much less centralized. Given the raft of problems brought about by the trade war and the coronavirus pandemic, that’s probably a good thing.