KEY POINTS
- Apple has diversified its production line across countries
- China still remains the main supplier
- Chinese remains viable alternative due to cheaper production costs
Apple has been trying to shift its manufacturing outside of China for a long time and has tried many permutations and combinations. The company has previously started making the MacBook and Mac PCs in the U.S.
However, it seems China still remains a viable alternative because of the cost-effectiveness it offers for the production of various products, especially smartphones and tablets.
Digitimes reported Thursday that despite the ongoing trade war, Apple is only deepening its co-operation with China-based supply chain manufacturers. This will help the company ramp up shipments to China and reduce overheads. The company’s new iPhone models and future devices are likely to be produced in China.
Apple can gain better control over production as it can make high-volume purchases in China. The company is expected to increase the rate of production of devices such as the AirPods with Chinese supply partners such as Luxshare-ICT. Chinese manufacturers are also expected to start manufacturing the Apple Watch.
While the Trump administration has been amping up pressure on manufacturers such as Apple to shift production back to the U.S. and create jobs in the country, the ongoing trade war between the two countries seems to be having the opposite effect. Global economies have taken a beating owing to the uncertain financial climate and China still seems the viable option owing to low labor costs.
Global handset sales profit has declined 11 percent to the U.S. $12 billion in Q3 2019. Apple, however, remains profitable and accounted for 66 percent of these earnings during the same period, according to research agency Counterpoint. The reason behind this may be the company’s financial prudence.
Apple CEO Tim Cook seems to be on good terms with President Trump, who calls him “Tim Apple.” The company also secured concessions from the tariffs Trump imposed on Chinese imports, earlier this year.
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