Apple has reportedly started moving part of its iPad production from China to Vietnam, reported Nikkei Asia June 1. A week earlier, the company encouraged its providers to favor Southeast Asian countries to produce more devices outside of China. The country’s restrictive health policy, with the confinement of Shanghai, has been a real burden for the apple brand, which wants to anticipate future supply problems.
iPad will be Apple’s second most produced device in Vietnam
Apple has been planning since January 2021 to produce a significant quantity of iPads in Vietnam. The main reason given was the increase in the cost of labor in China. Since the confinement of Shanghai and its consequences, the American company wants to accelerate the transfer of its production to other countries. Even if the Chinese metropolis begins its deconfinement, the effects on the supply chain will still be felt.
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One of China’s biggest iPad makers, BYD, has helped Apple establish its new production lines in Vietnam. The iPad would become the Apple brand’s second most-produced device in the Southeast Asian country, after the AirPods. Currently, the majority of providers who manufacture the iPad are in China and the firm to deliver 58 million iPads worldwide in 2021 specifies Nikkei Asia.
A decision taken by Apple to diversify its production chain and no longer depend as much on China. The choice of Vietnam is not trivial. In 2020, Foxconn, an Apple service provider, had already relocated part of its iPad production to the country. Vietnam is an attractive territory for tech because of its proximity to China. Other manufacturers have also transferred part of their production there, such as Sony with its televisions.
Providers need to increase their inventory of components
Beyond iPads, Apple has also asked its suppliers to increase their production of components, such as printed circuits, to make up for the losses caused by the closure of factories in Shanghai. The company wants its service providers to have enough stock to anticipate the next supply disruptions.
A supply chain manager explained to Nikkei Asia that ” these additional stocks could be a burden for the suppliers if the production of the other service providers is not finally interrupted again by the confinements “. Production in Shanghai has started to resume and even though ” suppliers will probably agree to produce more, they will not want to produce the equivalent of what is normally made in Shanghai “says the manager.
The company has just announced that its sales are less catastrophic than expected following the confinement of Shanghai. These results were made possible by the productivity of Foxconn. At the end of 2021, Apple had however cracked down on Foxconn by putting it on probation for the poor working conditions of its staff. Apple, which is probably delighted with the maintenance of its productivity, finds itself faced with a paradoxical situation: to achieve its performance, in April, the service provider forced its employees to sleep in its factories as part of the Chinese zero covid policy.