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Apple Is Reportedly Asking Suppliers to Shift at Least 15% of Output from China

Buyers seen using ipad products at an American multinationalBuyers seen using ipad products at an American multinational
China is a vital cog in the Apple engine. SOPA Images LightRocket via Getty Images

Apple Inc. has asked its largest suppliers to consider the feasibility of shifting 15% to 30% of its output from China to Southeast Asia in a dramatic shake-up of its production chain, the Nikkei reported.

The U.S. tech giant asked “major suppliers” to evaluate the cost of such a migration, the newspaper cited multiple sources as saying. Those included iPhone assemblers Foxconn Technology Group, Pegatron Corp. and Wistron Corp., MacBook maker Quanta Computer Inc., iPad maker Compal Electronics Inc. and AirPods makers Inventec Corp., Luxshare-ICT and GoerTek Inc., Nikkei cited them as saying.

China is a crucial cog in Apple’s business, the origin of most of its iPhones and iPads as well as its largest international market. But President Donald Trump has threatened Beijing with new tariffs on about $300 billion worth of Chinese goods, an act that would escalate tensions while levying a punitive tax on Apple’s most profitable product.

The company however has a backup plan if the U.S.-China trade war gets out of hand: Primary manufacturing partner Hon Hai Precision Industry Co. has said it has enough capacity to make all U.S.-bound iPhones outside of China if necessary, Bloomberg News reported last week. The Taiwanese contract manufacturer now makes most of the smartphones in the Chinese mainland and is the country’s largest private employer.