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Trade War Pushes Apple’s Production From China To Vietnam_mini

Trade War Pushes Apple’s Manufacturing From China To Vietnam

The ongoing trade war between the U.S. and China has disrupted global supply chains and pushed smartphone production to Southeast Asia. According to the Nikkei Asian Review, GoerTek has already announced its intention to shift production of Apple’s wireless earphones from China to Vietnam to evade tariffs and political tensions, with the company kickstarting the process by seeking input from its suppliers on the feasibility of shipping the necessary materials and parts for Apple’s AirPods directly to Vietnam. Although further discussions with Apple is still required to finalise this decision, GoerTek currently already has a production facility in northern Vietnam which produces wired headsets for iPhones.

Apple products such as AirPods, the Apple Watch and the smart speaker, HomePod, have been exempted in initial tariffs involving US$200 billion worth of Chinese goods, however, Trump has already threatened to impose tariffs on an additional US$267 billion worth of products from China in the near future. This would mean that the value of Chinese products that would be impacted by tariffs will reach US$517, and this would exceed the value of Chinese imports to the U.S. in 2017 that were worth US$505 billion.

Meanwhile, Cheng Uei, a supplier for Apple’s and Andriod’s chargers and connectors has commented that it is also considering shifting production back to Taiwan as well as Southeast Asian countries such as Thailand, Vietnam and the Philippines due to the trade war. Although this process also invites its own set of challenges, as Chairman T.C. Gou has elaborated that leaving China will mean the disruption of established supply chain networks and Chinese tax incentives and investment policies.

As of now, China constitutes Apple’s most important manufacturing base and functions as an important consumer market for the brand with sales from the country representing 20 percent of the company’s annual revenue.

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