According to the Wall Street Journal (WSJ), Apple notified its contract manufacturers about plans to increase its production outside China.
India and Vietnam, already sites of Apple’s global production lines, are among the favored locations for the company.
The WSJ reported that Apple makes 90% of its products like the iPhone, iPad, and Macbook using outside contractors in China.
The company has begun diversifying its production lines away from China due to the U.S.-China trade war and diplomatic tensions in recent years. In addition, the company’s heavy dependence on one country poses a potential risk if the relationship between the two countries deteriorates.
Experts in the industry told WSJ that Apple has long kept its manufacturing hub in China because it has low labor costs, well-trained workers, and a deep network of suppliers. In addition, local authorities often create favorable conditions for their contractors’ business operations.
Beijing’s strict lockdown measures are the main reason for Apple’s decision.
As China faces the latest wave of coronavirus outbreaks, Beijing has imposed strict Covid-fight measures that hurt Apple suppliers and Western companies due to supply chain disruption.
Foxconn’s plant in the Shenzhen province had to suspend operations in March following Beijing’s directions of pandemic control.
Pegatron Corporation, Apple’s second-largest iPhone foundry, also shut down its plants in Shanghai and the neighboring city of Kunshan production to comply with Covid restrictions.
In April, the company said that the resurgence of Covid in China could decrease its sales by about 8 billion dollars in the current quarter.
Last year, Apple reclaimed its top market share in China with 23%, beating local giants like Oppo, Vivo, and Huawei.
The company has long been criticized for compromising with the Chinese communist regime.
According to the New York Times, Apple’s kowtowing actions include:
Storing data in Chinese regime servers;
Sharing its customer information with Chinese officials;
Banning apps that expose the Chinese Communist Party, among others.