Apple asked its suppliers to begin planning for a shift of production out of China into South East Asia, as it becomes increasingly concerned about the risks of relying on manufacturing in the country.
Nikkei Asian Review reported Apple is preparing for a major restructuring of its supply chain, tasking key suppliers with evaluating the cost of moving between 15 per cent and 30 per cent of its manufacturing to other countries.
While the move is in part due to the rising tensions between the US and China, Apple reportedly intends to follow through with the plan even if the situation eases, believing there are many risks associated with manufacturing in China at the moment.
A source told the news agency Apple is concerned about rising labour costs and an over-reliance on China for its manufacturing.
The publication noted China had been a key part of Apple’s global success, enabling the vendor to swiftly react to peaks in demand by rallying hundreds of thousands of workers at short notice. Around 5 million people in China rely on Apple for jobs, which includes 1.8 million software and app developers. The company also directly employs 10,000 staff in the country.
One supplier, however, warned replicating the Chinese supply chain in another country would not be an easy task, predicting China would remain Apple’s core in the short-term.
“It’s a really long-term effort and might see some results two or three years from now,” said a supplier. “It’s painful and difficult, but that’s something we have to deal with.”