Apple Fast-Tracks Plan to Move Some Production from China

The protests and riots in response to China’s restrictive COVID-19 policies have resulted in Apple accelerating plans to relocate a chunk of production in that country, according to news reports claiming that “turmoil” in a Zhengzhou area called iPhone City helped prompt the change. At peak output, the zone produced roughly 85 percent of the iPhone Pro lineup, according to The Wall Street Journal, which says the factory “was convulsed in late November by violent protests.” China has long been the primary manufacturing location for Apple products. Vietnam and India are reportedly high on Apple’s list of alternate sites.

Apple is currently facing a situation in which “consumers doing Christmas shopping are stuck with some of the longest wait times for high-end iPhones in the product’s 15-year history, stretching until after Christmas,” The Wall Street Journal reports. In November, Apple issued a midquarter warning that problems in Zhengzhou were negatively impacting shipments of iPhone Pros.

“Coming after a year of events that weakened China’s status as a stable manufacturing center, the upheaval means Apple no longer feels comfortable having so much of its business tied up in one place, according to analysts and people in the Apple supply chain,” WSJ notes.

Online videos posted from Zhengzhou show workers at iPhone City — which is run by Foxconn and employs up to 300,000 people — protesting wages and COVID-19 restrictions by “throwing items and shouting ‘Stand up for your rights!’” in the presence of riot police, according to WSJ.

Apple is reportedly interested in decentralizing its China production, even if the plants it winds up relocating to are owned by companies based in China, WSJ says, citing Luxshare Precision Industry and Wingtech Technology as two Chinese companies “in line to get more Apple business” in facilities outside the communist-ruled nation.

Apple aspires to eventually originate some 40 to 45 percent of iPhones in India, as opposed to the less than 10 percent currently made there, while Vietnam is being evaluated to manufacture more of Apple’s other products, like laptops, smartwatches and AirPods.

Relocating Apple product assembly “is a difficult prospect, one that in September was reckoned to take eight years to shift as little as 10 percent of production out of China,” writes Apple Insider, noting that the company “does already have production centers being expanded in Vietnam and India, but there’s a lot more that needs to be in place for bigger shifts to be more effective.”

Notably, Apple needs to be able to relocate its “new product introduction,” or NPI, processes, whereby “Apple teams work with contractors on making product blueprints and prototypes into a full manufacturing plan.” China, with its deep bench of suppliers and production engineers, easily accommodates Apple’s NPI.

“With hiring slowdowns and a slowing global economy, it’s harder for Apple to allocate workers to deal with NPI with new suppliers in new countries,” Apple Insider says.

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