To circumvent the financial effects of Trump's trade dispute with China, Apple Inc is now asking its major suppliers to study the possibility of moving a big chunk of their production outside of China.
Apple is reportedly asking the companies to calculate the estimated cost of moving around 15 to 30 percent of their production to other countries in Southeast Asia.
The move is likely the company's latest attempt to restructure its supply in order to avoid paying the higher taxes brought about by the trade dispute between China and the United States.
Apple likely also doesn't want to incur the wrath of the Trump administration, which recently escalated the trade war into the tech sector with the inclusion of Huawei in its trade blacklist.
According to reports, Apple may be considering making the restructuring permanent, even if a resolution is reached in the ongoing trade war. Apple's decision reportedly came after it had determined that the risks of depending too much on Chinese manufacturers and suppliers were too great.
In response to Trump's trade ban on Huawei, China recently threatened to come up with its own trade blacklist. Apple is believed to be one of the potential candidates that could be included in the list, along with other US firms such as HP and Dell Technologies.
Some of the companies Apple had sent its request to included iPhone assemblers Pegatron Corp, Wistron Corp, and Foxconn. The company also sent a request to its MacBook manufacturers, including Quanta Computers Inc. iPad manufacturers Compal Electronics and AirPod makers Investec Corp, Goertek, and Luxshare were also requested to assess cost implications.
The aforementioned companies were asked to consider countries such as Malaysia, India, Vietnam, Indonesia, and Mexico as possible locations for their production capacities. Foxconn reportedly responded to Apple's call last week and mentioned that it already had enough capacity outside of China to meet demands for the US market.
Analysts predict that it might take around 2 to 3 years for Apple to move around 15 percent of its iPhone production outside of China. If Apple does go ahead with the plan, it could move 5 to 7 percent of its iPhone production to India in the next 12 months.
China is of course still a big market for Apple and it would be foolish for the company to completely give up selling its products in the country. In the first quarter of this year, around 18 percent of Apple's revenues had come from China.
That number is unfortunately expected to decrease as the trade tensions between China and the US escalate. Apple is likely planning to cover all its bases by diversifying its supply chain. However, a resolution to the ongoing trade dispute is likely a key element in ensuring Apple's success in Asia.
