Many believe that Apple is going to take its manufacturing out of China and move production to India and Vietnam while sourcing its chips from Arizona.
The tech giant is a well-known trendsetter when it comes to fueling changes in the supply chain. If they should move their production then other companies are sure to follow which may lead to a mass exodus from China. Many manufacturers have started to seriously rethink their supply chain due to the massive unrest in China and the unrelenting Covid lockdowns.
Reshoring/Nearshoring
The goal of many manufacturers is to move their operations closer to the consumer which is a process commonly referred to as reshoring or nearshoring.
The Trump Administrations’ 2018 tariffs caused the first talk of moving manufacturing plants. The goal was to eliminate the dependence on China. China has managed to stand on its own with its use of US imports diminishing.
China Plus One
A survey carried out by Gartner found that 95% of companies have started to evaluate their China sourcing. As many as half have already taken real action. Most have decided to go with a strategy referred to as ‘China plus one’ which means to source from China but also picking a backup country.
Benefits of China
China brings a lot to the table which is hard to walk away from. They have many decades of manufacturing experience and have managed to streamline the process and ensure that it is cost-effective. They have the expertise, machines, and raw materials needed for success.
Ultimately, whether Apple will say goodbye to China or not remains to be seen. If they do decide to go forward then they will probably remove 20% of their manufacturing and supply chain within eight years.
