Enlarge / Back of iPad Air 2019.
Samuel Axon
Faced with supply disruptions related to the blocking of COVID, Apple is moving part of its iPad production from China to Vietnam, according to Nikkei Asia. The company is also taking other measures with its suppliers to mitigate the impact of supply problems in China.
This is not Apple’s first attempt to move some of its production from China. Some iPhones are made in India, a small number of Macs are assembled in the United States, and Vietnam is already a major player in AirPods.
Apple sought to move more production to Vietnam in 2020 and 2021, but had to postpone some of its plans as COVID-19 hit the country.
Apple is not under the impression that moving everything to Vietnam will solve its problems, given that Vietnam may also be subject to blockades and other disruptions. And it is unlikely to move most of its supply lines there. But by diversifying into multiple regions, Apple’s management can hope to prevent the most devastating disruptions.
Currently, the company is so dependent on specific regions in China that disruptions there could affect its ability to ship new iPhones each year. It now seems possible that the product range this autumn will be affected.
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To prepare, Apple has reportedly told its suppliers to start storing specific components “such as printed circuit boards and mechanical and electronic parts.” These stocks can be relied on if further shutdowns and disruptions occur at sites near Shanghai, where Apple has historically relied to meet demand for its products.
Stocks may worry some vendors, Nikkei notes, because if the trend of declining consumer demand for electronics continues, vendors may be left with components they don’t need. On the other hand, Apple reportedly helped cover the bill to move supplies.
iPad was the only major product category of Apple, which recorded a decline in revenue over the previous year in the last quarterly earnings report. CEO Tim Cook suggested in a conversation with investors that supply problems are a factor.
Because the iPad and iPhone use some of the same components, and the iPhone is a more important product for the company, some analysts speculate that Apple may have chosen to prioritize iPhone components over the iPad.
Apple is likely to introduce and deliver new iPad and iPhone models this fall.
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