Samuel Axon
In the face of COVID lockdown-related supply disruptions, Apple is moving some iPad production from China to Vietnam, according to Nikkei Asia. The company is also taking other measures with its suppliers to soften the blow of supply issues in China.
This is not Apple’s first attempt to move some production out of China. Some iPhones have been made in India, a small number of Macs have been assembled in the United States, and Vietnam is already a major factor in AirPods production.
Apple was looking to move more production to Vietnam in 2020 and 2021, but it had to postpone some of its plans as COVID-19 surges hit the country.
Apple is not under the impression that moving everything to Vietnam would solve its problems, given that Vietnam may also be subject to lockdowns and other disruptions. And it’s unlikely to move the majority of its supply lines there. But by diversifying across multiple regions, Apple’s leadership may hope to stave off the most devastating disruptions.
Currently, the company is so reliant on specific regions in China that disruptions there could impact its ability to ship new iPhones every year. It already looks possible that this fall’s product lineup will be affected.
To prepare, Apple has reportedly told its suppliers to begin stockpiling specific components “such as printed circuit boards and mechanical and electronics parts.” These stockpiles can be leaned on if further shutdowns and disruptions happen at sites near Shanghai, where Apple has historically relied on to meet the demand for its products.
The stockpiles may worry some suppliers, Nikkei notes, because should a trend of falling consumer demand for electronics continue, the suppliers could be left with components that aren’t needed. On the other hand, Apple has reportedly helped foot the bill for moving supplies around.
The iPad was Apple’s only major product category that saw a drop in revenue year-over-year in the last quarterly earnings report. CEO Tim Cook suggested in a call with investors that supply-related issues were a factor.
Since the iPad and the iPhone use some of the same components, and the iPhone is the more important product for the company, some analysts speculated that Apple may have chosen to prioritize components for the iPhone at the iPad’s expense.
Apple is likely to introduce and ship new iPad and iPhone models this fall.
