Move out of China urgently, AirPods supplier told

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Move out of China urgently, AirPods supplier told

A major AirPods supplier says that US client reps have been visiting the company on an almost daily basis to ask when it can move out of China. While Apple is not explicitly named, it is near-certain that it is one of the companies applying pressure.

The Chinese contract manufacturing giant said that it is investing in Vietnam, as well as considering expanding into India

The pressure to reduce dependence on China

We’ve been warning for many years about both the need and the difficulty of reducing Apple’s dependence on China, but the pandemic made even clearer the risks of the company having most of its manufacturing eggs in one basket. COVID-19-related disruption at the world’s biggest iPhone assembly plant was estimated to have cost the company a billion dollars per week.

Apple has been gradually diversifying its supply chain, with assembly plants in India, VietnamIndonesia, and elsewhere.

It was last month revealed that Foxconn was expanding Apple production in Vietnam, to include MacBooks and the 2023 Mac Pro. Apple is also moving more of its supply chain orders outside of China.

Additionally, AirPods assembly in India got one step closer in January, as enclosure manufacturing began there – usually a precursor to full assembly work.

‘Move out of China’ pressure on AirPods supplier

Bloomberg reports that Apple suppliers are accelerating efforts to relocate production outside of China, and one AirPods maker says that its clients are asking about it almost daily.

AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China […] It’s investing an initial $280 million in a new Vietnam plant while considering an India expansion, Deputy Chairman Kazuyoshi Yoshinaga said in an interview.

US tech companies in particular have been pushing hard for manufacturers like GoerTek to explore alternative locations, said the executive, who oversees GoerTek’s Vietnamese operations from northern Bac Ninh province.

“Starting from last month, so many people from the client side are visiting us almost every day,” Yoshinaga said from his offices at GoerTek’s sprawling industrial complex north of Hanoi. The topic that dominates discussions: “When can you move out?”

While GoerTek is a less well-known brand than Foxconn, it is a massive Apple supplier. It also looks set to make Apple Headsets in Vietnam from next year.

Yoshinaga says that US companies are applying similar pressure to most of their Chinese suppliers.

Most Chinese tech manufacturers are experiencing the same pressure. “I would say currently 90% of them, they’re looking at that,” he added. “It’s the brand companies’ decisions.”

While the trade war with China begun under the previous US administration was a major spur to accelerate plans, ongoing COVID-19 disruption, trade sanctions, and the recent row over the Chinese spy balloon(s) have also seen an increase in tension between the two countries.

Photo: Sumudu Mohottige/Unsplash

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