Earlier this month, amid some delays due to COVID-19 outbreaks in China and the unrest that followed, the Wall Street Journal reported that Apple has been making plans to move production of the iPhone, at least in part, out of China.
The plan, per the Journal, is to move some amount of production capacity to other Asian countries, like India and Vietnam. Apple also plans to diversify its China production among different suppliers.
But that’s not something that the company will be able to switch overnight.
“In the past, people didn’t pay attention to concentration risks,” said Alan Yeung, a former U.S. executive for Foxconn, told the Journal. “Free trade was the norm and things were very predictable. Now we’ve entered a new world.”
Not long after, CNN reported further details about why switching up where iPhones are made will be easier said than done.
Following the Wall Street Journal report, analyst Daniel Ives of Wedbush Securities wrote in a note to clients that the situation in China amounts to “an absolute disaster for Cupertino over the past month and is now causing iPhone shortages between 10 million and 15 million units in this all-important holiday season.”
Back in September, Apple announced this year’s iPhone lineup, consisting of the iPhone 14, iPhone 14 Pro, iPhone 14 Pro Max, and iPhone 14 Pro. In November, iPhone issued a new update on the supply of the devices, stating that the facility in Zhengzhou was “currently operating at significantly reduced capacity.”
Ives added that such a transition will not be easy and will take a long time, while he assailed China’s “Zero COVID” policy, which entails continuing lockdowns, long after the Western world has mostly abandoned that tactic.
“The shift out of China will not be easy and come with clear logistical, engineering, and infrastructure hurdles as the aggressive move to India and Vietnam now begins with the Apple ecosystem alerted. We believe by 2025/2026 if Apple moves aggressively more than 50% of iPhone production could come out of India and Vietnam vs. single digits today.”
Meanwhile, CNBC reported last week that Apple may be moving some production of the iPad outside of China as well. While Apple already makes older iPhones and part of the iPhone 14 lineup in India, “a lack of local manufacturing expertise” is a key barrier to moving more production there. Also possibly hurting matters are tensions between China and India.
“I think in five years, 35% will be manufactured in India,” longtime Apple analyst Gene Munster, now of Loup Ventures, told CNBC. “I think Apple will add iPhone production to other countries outside of India and China in the next five years. Perhaps Vietnam, Malaysia, and the USA.”
Back in 2020, when the COVID pandemic first began, led to delays in the supply chain that resulted in that year’s iPhone models arriving later than usual. As it happened, two of that year’s iPhones arrived on the market in October, and the other two in November.
What about the USA?
During Donald Trump’s presidency, Trump frequently pressured Apple CEO Tim Cook, who he called “Tim Apple,” to manufacture more things in the U.S.
This led to a strange episode in November of 2019, when Trump visited a manufacturing facility in the Austin area that had recently been expanded, one where Mac Pro desktop computers are manufactured.
Afterward, Trump stated that he had “opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America.”
The plant had not been newly reopened, nor was it an Apple-owned facility.
Stephen Silver is a Senior Editor for 19FortyFive. He is an award-winning journalist, essayist and film critic, who is also a contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.