Big Board Alerts

January 4, 2024
Apple suppliers are moving from China to the tune of $16 billion so far

Caught off guard in the crossfire of the US-China trade wars in October, Apple has begun moving its operations to the tune of $16 billion so far. A high demand to assemble the iPhone and iPad took Apple to China, partnering with Foxconn and China in 2001. The assembling later moved to the Foxconn facility in Shenzhen. The question now is — where will Apple reshore manufacturing? The favorites have been named India, Mexico, the US, and Vietnam, and the process will be ongoing.

Most technology firms have been entirely or almost entirely dependent on China but are working their way out of that area of dependency. The pandemic caused considerable breaks in production due to a lack of component supplies, the labor pool, and government issues.

Apple revenue greatly impacted until relocation is complete.

TD Cowen has analyzed over 1,000 financial filings, using numbers from Foxconn and other firms, and estimates the iPhone is still held in China but that India’s Tata Electronics has good potential to be an iPhone manufacturer in the future. TD Cowen said, “Apple’s revenues have been impacted by over $30 billion.” He continues, “We believe these risks are ongoing in nature, and unforeseen environmental disasters could also be included as a non-trivial factor to monitor.”

All of the reshoring costs will likely leave Apple using big bucks in the short term — but once all of the China exit costs are taken care of, and production capacity is at scale with new, local labor partners — Apple should, indeed, be on top again.

Mac and iPad have made good reshoring headway in Southeast Asia, and Vietnam is evolving into a hub of small volumes of MacBooks, the Apple Watch, and a small volume of iPads. TD Cowen also estimated that it will take at least 18 months for Apple to establish a new plant for manufacturing — and supply chains will demand even more time to organize and secure.

Featured Image Credit: Suzy Hazelwood; Pexels

The post Apple suppliers are moving from China to the tune of $16 billion so far appeared first on ReadWrite.

 

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