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Apple's main AirPods Supplier GoerTek claims that most Apple Suppliers are Racing to Exit China


According to a new report this morning, Apple's Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to pre-empt fallout from escalating Beijing-Washington tensions, according to one of the US company’s most important partners.

AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China, which today cranks out the bulk of the world’s gadgets from iPhones to PlayStations. 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?”

The expanding conflict between the US and China, which began with a trade war but has since expanded to encompass sweeping bans on the exchange of chips and capital, is spurring a rethink of the electronics industry’s decades-old supply chain. The world’s reliance on the Asian nation became starkly clear during the Covid Zero years, when Beijing’s restrictions choked off the supply of everything from phones to cars.

Apple’s suppliers rarely comment on its thinking, in part because of the US company’s famous insistence on secrecy across its global supply chain.

The iPhone maker has kept mum on whether it plans to diversify out of China, which would entail revamping a model Chief Executive Officer Tim Cook pioneered under Steve Jobs. The US giant has been careful to avoid suggestions it might reduce its investment in China, where it’s built an ecosystem centered on companies such as GoerTek and Foxconn Technology Group, which collectively employ millions.

Yet behind the scenes, 9 out of 10 of Apple’s most important suppliers may be preparing large-scale moves to countries like India, which is dangling incentives to drive Narendra Modi’s Make in India initiative.

Bloomberg Intelligence estimates it could take eight years to move just 10% of Apple’s capacity outside of China. Yet GoerTek executive argues it’ll be far quicker.

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.”

For now, Vietnam remains an attractive location. Apple may be looking to make the country a manufacturing hub for AirPods, iPads and MacBooks. AirPods orders are dominated by GoerTek and fellow Chinese firm Luxshare Precision Industry Co., which too has a complex in north Vietnam.

Many US companies are planning to shift production there, regardless of cost, Yoshinaga said. Others like Jabil Inc. are considering India. But overall, the flow is consistently going to be outward from China, he said. For more on this, read the full Bloomberg report.

With the tension between the U.S. and China over Taiwan escalating, any attack on Taiwan would disrupt trade worldwide overnight sending U.S. companies into a panic. How could this not put pressure on Chinese companies to create new manufacturing hubs outside of China. In addition, some in the U.S. Republican party are developing a part of their platform to heavily tax China and products made in China that will escalate tensions between the two countries even further. This would would put more pressure on U.S. companies to further push their suppliers to create and expedite the creation of  new production hubs outside of China. GoerTek's CEO's point of view should be taken very seriously.

10.0F - Apple News


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