Samuel Akerson
According to Nikkei Asia, Apple is shifting some iPad production from China to Vietnam in the face of supply disruptions related to the COVID-19 lockdown. The company is also taking other steps with suppliers to mitigate the impact of supply issues in China.
This isn’t the first time Apple has attempted to move some production out of China. Some iPhones are already made in India, a handful of Macs are assembled in the US, and Vietnam is already a major factor in AirPods production.
Apple hoped to move more production to Vietnam in 2020 and 2021, but it had to delay some of its plans as a COVID-19 surge hit the country.
Given that Vietnam could also be subject to blockades and other disruptions, Apple doesn’t think moving everything to Vietnam will solve its problems. And it’s unlikely to move most of the supply line there. But by diversifying across multiple geographies, Apple’s leadership may want to avoid the most damaging disruption.
Right now, the company is so reliant on specific regions of China that disruptions there could affect its ability to ship new iPhones each year. It looks like the lineup could be affected this fall.
To prepare, Apple has reportedly told its suppliers to start stocking specific components “such as printed circuit boards and mechanical and electronic parts.” If there are further shutdowns and disruptions at factories near Shanghai, where Apple has historically relied on to meet demand for its products, it can rely on those stocks.
Inventory could worry some suppliers, Nikkei noted, because suppliers could be left with unwanted components if the trend of declining consumer demand for electronics continues. On the other hand, Apple reportedly helped pay for the delivery of supplies.
The iPad was Apple’s only major product category with a year-over-year revenue decline in its last quarterly earnings report. Supply-related issues were a factor, Chief Executive Officer Tim Cook said on a conference call with investors.
Since the iPad and iPhone use some of the same components, and the iPhone is the more important product for the company, some analysts speculate that Apple may choose to prioritize the iPhone’s components at the expense of the iPad.
Apple is likely to launch and launch new iPad and iPhone models this fall.