(Daily Mail) Apple is planning to move parts of its production out of China after violent governmental protests delayed the company’s production – as CEO Tim Cook eyes up Vietnam and India as new hubs.
The tech giant has accelerated plans to leave Zhengzhou, China – where iPhone City is located – in recent weeks, a source told the Wall Street Journal.
COVID-19 protests and wage disputes have broken out in the city, which employs up to 300,000 workers, leaving Apple’s busiest time of year in shambles with production and delivery delays.
Consumers are facing the longest wait times in the iPhone’s 15-year history, with estimated ship dates being after Christmas, WSJ said. In addition, Apple’s fourth quarter productions are around 10million less than expected, with iPhone Pro and Pro Max being hit the hardest.
In November, the company issued a notice that iPhone backups could happen due to the health restrictions in Zhengzhou.
It is now eyeing India and Vietnam to reduce its dependency on Taiwanese-based assemblers led by Foxconn Technology Group.
Tim Cook’s company Apple is looking to work parts of its production out of China due to COVID-19 protests and wage disputes delaying productions at its busiest time of the year
Apple’s Zhengzhou factory – known as iPhone City – is only running at around 20 percent, but could be bumped up to 40 percent this month, after China quarantined millions of people after a protest. Apple customers are facing the longest wait times in the phone’s history and ship dates are estimated to extend past Christmas
However, the countries could propose an issue for new production introduction as it does not have the amount of production engineers and suppliers to build hundreds of millions of products like China does.
iPhone City, located in Zhengzhou, made around 85 percent of Pro lineup at one point.
But analysts told WSJ that Apple no longer feels comfortable having the majority of its business locked in one place.
In the past, people didn’t pay attention to concentration risks,’ former US executive for Foxconn, Alan Yeung said. ‘Free trade was the norm and things were very predictable. Now we’ve entered a new world.’
Apple is hoping, long-term, to ship up to 45 percent of its products from India, which currently only does single digits, according to Ming-chi Kuo, an analyst at TF International Securities.
And Vietnam could be largely handling the production AirPods, smartwatches and laptops, WSJ reported.
Foxconn, which runs the Chinese factory, shipped $32billion in product in 2019, but Apple is reportedly looking to shift to India and Vietnam. Apple is hoping, long-term, to ship up tp 45 percent of its products from India, which currently only does single digits
However, the company could still maintain a large presence in China – which has brought in around 1million local jobs, according to People’s Daily, a state-backed newspaper – by using other supplies. Two companies Apple is reportedly considering is Luxshare Precision Industry Co. and Wingtech Technology Co.
Foxconn, which run the Zhengzhou factory, shipped $32billion in product in 2019 and accounted for nearly four percent of China’s exports in 2021, according to People’s Daily.
Even with Beijing’s tensions with Taiwan, which the US has been politically involved in, the country still looks fondly at Apple presence in the country, the People’s Daily reported.
However, despite China easing some of the COVID-19 restrictions due to the ongoing protests, Apple’s factory is still missing a lot of workers. Numbers are number, but it is estimated to be thousands to tens of thousands of workers, according to WSJ.
Kuo estimated that it is running at about 20 percent capacity, but it could shoot up to 40 percent this month.
Foxconn has tried to move some of the production to its Shenzhen factory, which is roughly 1,000 miles away from the main factory, but it cannot make up the entire gap, according to WSJ.
COVID-19 restriction protests (pictured) have broken out recently, in a rare display of government resistance in the Communist country
A protest broke out near the factory and the government ordered at five-day quarantine
And now Foxconn is offering monetary incentives to get workers back in the factory by offering an $1,800 bonus in January to any full-time worker who started in November or earlier. Those who wanted to quit got a reported $1,400.
