Competing for the Dragon Cake: Apple Suppliers Battle to Exit China

Apple’s Chinese suppliers are likely to move their manufacturing capacity out of the country much faster than many observers expect to avoid the fallout from escalating tensions between Beijing and Washington, according to one of the US firm’s top partners.

GoerTek, maker of the AirPods, is one of several manufacturers exploring locations outside of China, which today supplies most of the world with iPhone and PlayStation accessories.

Vice President Kazuyoshi Yoshinaga said in an interview that the company is initially investing 280 million dollars in a new factory in Vietnam, considering expansion in India. He pointed out that American technology companies in in particular they were lobbying for manufacturers of accessories for their devices, such as GoerTek, to move their equipment in alternative venues, according to Bloomberg, and Al Arabiya.net he saw it.

Yoshinaga added that as of last month, the dominant question from the company’s customers was when to exit China.

This comes after the US-China conflict that began with a trade war escalated to include a blanket ban on the exchange of chips and capital and prompted rethinking the decades-old electronics industry supply chain.

And behind the scenes, 9 out of 10 of Apple’s top suppliers may be preparing for large-scale moves in countries like India, by providing incentives to promote Prime Minister Narendra Modi’s ‘Make’ initiative. in India”.

Bloomberg Intelligence estimates it could take 8 years to move just 10% of Apple’s capacity out of China.

Vietnam is currently the only production site of GoerTek outside of China. Yoshinaga said the new 62-hectare complex in Bac Ninh will produce products for major American brands and is expected to start operating within a year.

Yoshinaga said his company, which also plans to produce virtual reality headsets in Vietnam from 2024, the Southeast Asian country is expected to produce more than half of its global revenue in three years, compared to a third today.

He added that the company is also asking its suppliers to scout northern Vietnam for new factories. It produces Quest virtual reality headsets for Meta Platforms and PSVR devices for Sony Group.

He pointed out that GoerTek had established its operations in Vietnam a decade ago to produce audio devices at the request of Samsung Electronics.

He said Vietnam’s proximity to China, a coastal network of ports, a young and educated workforce and relative political stability make the Southeast Asian country an ideal manufacturing hub, as the company currently employs around 40,000 workers in the its factories in China. But Yoshinaga sees the anti-corruption campaign as worrying, which led to the recent dismissal of the president and two deputy prime ministers.

For now, Vietnam remains an attractive place. Apple may be looking to make the country a manufacturing hub for AirPods, iPads and MacBooks.

Yoshinaga said many US companies intend to move production there, regardless of the cost. Others like Jabil Inc. think of India. But in overall, the flow will always be outward from China, he said. “I don’t think he’s coming back. It’s One Direction,” she said.

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