Move triggered by the possibility of tariffs
The US-China trade war has already given a scare to Apple’s (AAPL) investors vis-à-vis the possibility of a 25% tariff on Apple goods being imported from its Chinese facilities.
As a result, Apple might be considering shifting its plants out of China to avoid the tariff. According to a report by Nikkei, the iPhone maker is in talks with its suppliers to move 15%–30% of its hardware production out of China.
The process could be expensive and could take a long time
According to the report, the tech behemoth is in the early stages of a restructuring of its supply chain. According to the report, Apple is likely to do so even if the US and China reach a trade deal. India and Vietnam are two options Apple could explore. Other countries reportedly being considered are Mexico, Malaysia, and Indonesia.
In fact, Foxconn, Apple’s biggest supplier, already confirmed in April that it will start the mass production of high-end iPhones in India.
Moving even part of the company’s assembly out of China will be “painful and difficult,” said Nikkei, citing a supplier. The partial exodus could also take a couple of years.
Whether the exodus will have an effect on iPhone supply isn’t yet known. However, it could have a small impact on employment in China.