Apple to diversify from Chinese supply chain after rocky 2022

  • Apple looks to be moving some pressure away from its Chinese supply chain after a 2022 filled with production disruptions.
  • Manufacturing partners like BOE and Tata are set to open new, major factories to produce Apple devices in Vietnam and India, respectively.
  • Last year saw Apple’s iPhone Pro supply line severely affected by COVID-19 restrictions and unrest at one of its Chinese plants.

This week has seen significant efforts from large companies towards lowering Apple’s reliance on its Chinese supply chains. Reports last year indicated that the consumer tech giant was growing tired of the production woes it was facing at its Foxconn manufacturing facility in the Zhengzhou province.

The Zhengzhou facility, also known as “iPhone City”, is the world’s largest manufacturer of high-end iPhones, at one point building 85 percent of all iPhone Pro devices. It was beset by a number of disruptions last year that severely impacted the production of the smartphones.

These included rare civil unrest by factory workers due to draconian COVID-19 restrictions and claimed unpaid wages. Supply chain disruptions at the Foxconn plant coincided with the lucrative holiday season and Black Friday. Many South Africans looking for the latest iPhone Pro models were apparently placed on long wait lists.

Moving pressure away from the Chinese supply chain

Today, Reuters reported that BOE Technology Group, a Chinese smartphone display maker that supplies both Apple and rival Samsung, is planning to invest a sum of around $400 million to build two factories in Vietnam.

Vietnam is one of the countries that Apple was supposedly looking into as a possible alternative to China in the Wall Street Journal report about its supply chain woes published last year.

Reuters indicates that this move from BOE is part of a wider plan from tech firms led by Apple and Taiwanese factory owner Foxconn to begin diversifying from the Chinese supply chain amid trade and geopolitical tensions between the US and Xi Jinping’s communist state, as well as to alleviate some of the production foibles caused by China’s harsh COVID-19 restrictions.

BEO is set to establish a plant in Northern Vietnam, adding to a smaller plant it manages in the south of the country that produces TV screens.

Apple in India

The other country singled out in the 2022 WSJ report is India, and Bloomberg reported on Tuesday that automobile manufacturer (among many other things) Tata is close to opening the country’s first homegrown iPhone factory.

Tata is looking to purchase a facility owned by Taiwan’s Wistron Corp, which also manufactures devices for Apple. The deal is expected to close by the end of March and could see India carving out more local contenders to China’s electronics dominance.

iPhone components are already being manufactured by Tata’s Hosur factory, near Bangalore, where the conglomerate has also begun ramping up hiring. To sweeten the deal even further, Tata says it is going to launch 100 new Apple stores in the country to serve its more than 1.4 billion people.

According to Bloomberg, Tata is also set to enter chipmaking to add another product to its long line of existing goods and services, from branded salt to cars and even an airline.

In that regard, Apple is set to develop its own mobile chips in-house to handle WiFi and Bluetooth capabilities. The future could see more of the company establishing its own silicon for its devices.

[Image – Zhiyue on Unsplash]


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