California

Battered by Beijing’s strict anti-Covid measures, Apple Inc has told some of its contract manufacturers that it wants to increase the production outside China, the Wall Street Journal reported, citing people familiar with the matter.

India and Vietnam, which are already sites of Apple production, are among the countries being seen as an alternative option to China, the report added.

This move by Apple, being the largest US Company by market capitalization, will influence the thinking of other Western companies which have been considering to reduce their dependency on China for manufacturing or key materials in the wake of Beijing’s indirect support to Russia for its invasion in Ukraine and lockdowns in some cities to fight Covid-19.

According to analysts, over 90 per cent of Apple products including iPhones, iPads and MacBook laptops are manufactured in China by outside contractors.

Responding to Apple’s supply chain challenges in April, Chief Executive Officer Tim Cook said, “Our supply chain is truly global, and so the products are made everywhere. We continue to look at optimizing.”

The lockdowns imposed in Shanghai and other cities as part of China’s anti-Covid policy have disrupted supply-chain for many Western companies.

In April, Apple warned that the resurgence of COVID-19 will hinder the sales by as much as USD 8 billion in the current quarter. China’s strict anti-Covid rules have stopped Apple from sending its executives and engineers into the country over the past two years, which means that it becomes hard for them to check the production sites in person. The power outages last year also dented China’s reputation for reliability.

Except India, China was the one which have the pool of qualified workers that exceeds the entire population of many alternative countries in Asia.

Apple sees India as the closest thing to the next China, as both of them are similar in population and both offers low cost, Wall Street Journal reported citing people who are familiar with the matter. Apple is in conversation with some existing suppliers about expanding in India, including production for export, people familiar with the matter said.

India made 3.1 per cent of the world’s iPhones last year, and the proportion is forecast to increase to 6 per cent to 7 per cent this year, according to research firm Counterpoint.