Asia Minute: Apple’s Asian Mix

Jun 20, 2019

Apple Store in Hong Kong
Credit 3005398 / Pixabay

As the U.S. and China continue talking about trade, some U.S. companies may not wait for the results to take actions of their own. According to a report from Japan, Apple is looking at revising its supply chain.

The Nikkei Asian Review reports Apple is taking a fresh look at Southeast Asia. It says the company is asking its suppliers to determine the cost of shifting nearly a third of their production away from China.

Nikkei says those plans will go ahead no matter what happens with the ongoing trade negotiations between the U.S. and China — Apple deciding that political risk demands more geographic diversity in production.

It’s all about managing the supply chain — the various components and companies that put them into Apple products.

Take the Taiwanese company Foxconn. It’s the world’s largest contract manufacturer of electronics with extensive factories in mainland China.

Last week, Foxconn held an investor conference call, and executives said they could supply all of Apple’s needs using facilities outside China. The company has other Asia Pacific factories in Vietnam, Indonesia, Japan and Australia.

Spreading production across countries has been popular for many years with some U.S. companies following a strategy known as “China plus one” — running factory lines in China and at least one other location in Asia as a backstop against political volatility.

But no matter the result of the tariff discussions, there is little evidence that technology companies are planning to return major production to the United States.