APPLE LOOKS AT OPTIONS. Apple Explores Options for Production in China – By Todd Horwitz, Bubba Trading

 

 Apple Inc has asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday. Apple’s request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company’s decision, Nikkei said, citing multiple sources. The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said.

Earlier this month, credit rating agency Fitch said it views Apple, Dell Technologies Inc and HP Inc as potential blacklist candidates if China blacklists U.S. companies in retaliation for restrictions on Huawei.  Key iPhone assemblers Foxconn, Pegatron Corp, Wistron Corp, major MacBook maker Quanta Computer Inc, iPad maker Compal Electronics Inc, and AirPods makers Inventec Corp, Luxshare-ICT and Goertek have been asked to evaluate options outside of China, Nikkei reported.

The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private. Last week, Foxconn said it had enough capacity outside China to meet Apple’s demand in the American market if the company needed to adjust its production lines, as U.S. President Donald Trump threatened to slap further tariffs on Chinese goods.

Apple CEO Tim Cook has tried to remain neutral in the trade feud, saying repeatedly that the countries are bound to reach an agreement because it was in their best interests. He met with President Trump last week and visited the office of Mr. Lighthizer in January, according to public records. He also attended a Chinese government event in March in Beijing.

Still, Apple is making contingency plans. In May, the U.S. laid out nearly $300 billion of additional Chinese imports that could be hit with levies of up to 25% as early as this summer—including smartphones and notebook PCs. To avoid this potential wave of new tariffs, Apple has accelerated production and shipment of some China-made products for stockpiling, people familiar with the matter said.

Todd “Bubba” Horwitz

Financial Markets and Political Commentary
 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.