In its early years, Apple invested heavily in China for the manufacturing of its hardware devices but as the company grow in size, its extensive supply chain continues to face a lot of uncertainties.
The company recently added an AR/VR headset to its line of ever-growing product portfolio but the current focus will certainly be its next-gen iPhone 15 series.
Its Chinese contractor, Foxconn, is said to have begun hiring for the production of the next-gen iPhone while another contractor in Vietnam is said to have set up a new plant while the production of the MacBook will reportedly be moved to Thailand.
In short, the pie is now getting shared with other manufacturing Southeast Asian countries.
Foxconn is the world’s largest iPhone factory and the company is offering an additional US$1,050 (CNY7,500) bonus for workers who previously resigned to come back while it prepares for the production of the next-gen iPhone models which are expected to debut by September.
For experienced workers who have had more than two stints at Foxconn, a bonus of CNY8,000 is being offered, according to a job recruitment advertisement published by the Zhengzhou campus.
This will in fact be the highest bonus ever offered by the company since production was disrupted by China’s draconian Covid-19 controls last November.
Even though the majority of the production of past and potential future iPhones will continue to take place in China’s Foxconn, the competition and the aim to diversify the supply chain continues to grow as the tech giant is now looking at other potential manufacturers to contract within the Southeast Asian region.
Compal Electronics, a prominent manufacturer of Apple products such as the iPad and Apple Watch, recently announced its acquisition of land worth US$30 million in Vietnam.
The purpose of this investment is to construct a new plant that will facilitate the expansion of production capacity. In a stock exchange filing, Compal revealed that its Vietnamese subsidiary has secured a 40-hectare plot in the Lien Ha Thai Industrial Park located in Thai Binh province.
This development comes as Compal already operates manufacturing facilities in various locations, including Vinh Phuc in Vietnam, Chongqing and Jiangsu in China, and Phetchaburi in Thailand, as indicated in Apple’s latest supplier list.
In a separate report from the Taiwanese newspaper Economic Daily News, it was mentioned that there is a possibility of shifting the production of MacBook laptops from China to Thailand.
The article cited industry sources and suggested that Radiant Opto-Electronics would be the backlight module supplier, while Quanta and Foxconn would handle the assembly of the newly released MacBook models.
This potential move marks a significant change as China has traditionally served as the exclusive production base for MacBooks for several years.
Earlier reports in April had already indicated that Apple was exploring the idea of assembling and producing certain parts and modules for its laptops in Thailand.
Additionally, Apple has been manufacturing its Apple Watch in Thailand for over a year, further illustrating the diversification of its supply chain away from China.
The evolution of Apple’s supply chain reflects the company’s ongoing efforts to diversify its sourcing and reduce its dependence on Chinese factories, particularly amidst the growing geopolitical tensions between the United States and China.
A report by the Taiwanese daily newspaper DigiTimes earlier this year predicted that India could assemble up to 50 percent of Apple’s iPhones by 2027, a substantial increase from the current figure of less than 5 percent.
This forecast is more ambitious than JPMorgan’s earlier prediction, which anticipated that India would assemble 25 percent of all iPhones globally by 2025.
Additionally, Vietnam is projected to manufacture 20 percent of all iPads and Apple Watches, 5 percent of MacBooks, and 65 percent of AirPods by 2025, according to the same report.
Over the past year, Apple has been actively establishing new manufacturing facilities outside of China.
The latest supplier list reveals an increase in the number of production locations in India, from 11 in 2021 to 14 in the fiscal year of 2022.
In Thailand, the number of facilities grew from 22 in 2021 to 28 in the same period. Meanwhile, the number of production facilities in Vietnam remained constant at 27.
These developments showcase Apple’s commitment to diversifying its production capabilities and reducing its reliance on a single manufacturing base.
By expanding its manufacturing footprint in various countries, Apple aims to mitigate risks associated with geopolitical uncertainties and potential disruptions in the global supply chain.
Diversification allows the company to adapt to changing circumstances, minimize logistical challenges, and enhance its overall operational resilience.
Furthermore, such expansion enables Apple to tap into the skilled labor forces, favorable investment climates, and emerging markets of these countries, thereby bolstering its global competitiveness.
The strategic decision to establish production sites in different countries also aligns with Apple’s long-standing commitment to responsible and sustainable business practices.
By distributing manufacturing across multiple locations, the company can minimize its carbon footprint and reduce the environmental impact associated with transporting goods over long distances.
Additionally, localized production allows Apple to support local economies, create jobs, and contribute to the development of local industries.
Compal Electronics’ investment in a new plant in Vietnam reflects the company’s efforts to expand its production capacity and meet the growing demand for Apple products.
The potential shift of MacBook production from China to Thailand underscores Apple’s strategy of diversifying
its supply chain to reduce reliance on a single country.
As Apple continues to broaden its manufacturing footprint beyond China, countries like India and Vietnam are expected to play increasingly significant roles in the production of iPhones, iPads, Apple Watches, MacBooks, and AirPods.
These developments not only mitigate risks associated with geopolitical tensions but also align with Apple’s commitment to sustainability and responsible business practices.
By diversifying its production locations, Apple aims to enhance its operational resilience, tap into emerging markets, and contribute to local economies.