Apple suppliers racing to exit China, says AirPods maker
- Wednesday, 01 Mar 2023
GoerTek is investing an initial US$280mil (RM1.26bil) in a new Vietnam plant while considering an India expansion, deputy chairman Kazuyoshi Yoshinaga said. — Reuters
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HANOI: Apple Inc’s Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to pre-empt fallout from escalating Beijing-Washington tensions, according to one of the United States company’s most important partners.
AirPods maker GoerTek Inc is one of the many manufacturers exploring locations beyond its native China, which today cranks out the bulk of the world’s gadgets from iPhones to PlayStations.
It’s investing an initial US$280mil (RM1.26bil) in a new Vietnam plant while considering an India expansion, deputy chairman Kazuyoshi Yoshinaga said in an interview.
US tech companies in particular have been pushing hard for manufacturers like GoerTek to explore alternative locations, said the executive, who oversees GoerTek’s Vietnamese operations from northern Bac Ninh province.
“Starting from last month, so many people from the client side are visiting us almost every day,” Yoshinaga said from his offices at GoerTek’s sprawling industrial complex north of Hanoi. The topic that dominates discussions: “When can you move out?”
The expanding conflict between the United States and China, which began with a trade war but has since expanded to encompass sweeping bans on the exchange of chips and capital, is spurring a rethink of the electronics industry’s decades-old supply chain.
The world’s reliance on the Asian nation became starkly clear during the zero-Covid years, when Beijing’s restrictions choked off the supply of everything from phones to cars.
Apple’s suppliers rarely comment on its thinking, in part because of the United States company’s famous insistence on secrecy across its global supply chain.
The iPhone maker has kept mum on whether it plans to diversify out of China, which would entail revamping a model chief executive officer Tim Cook pioneered under Steve Jobs.
The United States giant has been careful to avoid suggestions it might reduce its investment in China, where it’s built an ecosystem centred on companies such as GoerTek and Foxconn Technology Group, which collectively employ millions.
Behind the scenes, nine out of 10 of Apple’s most important suppliers may be preparing large-scale moves to countries like India, which is dangling incentives to drive Narendra Modi’s Make in India initiative.
Bloomberg Intelligence estimates it could take eight years to move just 10% of Apple’s capacity outside of China.
The GoerTek executive argues it’ll be far quicker.
Most Chinese tech manufacturers are experiencing the same pressure.
“I would say currently 90% of them, they’re looking at that,” he added. “It’s the brand companies’ decisions.”
India is high on clients’ wish-lists – a reflection of its potential both as a market and a manufacturing base.
“We get requests from our clients almost every month. ‘Do you have any plans to expand to India?’ Yoshinaga said.
“If they decide to build up the production lines in India, we may have to think about it seriously. Currently we are focusing on developing our Vietnam production facilities.”
Vietnam for now is the company’s sole manufacturing site outside of China. The envisioned new 62-hectare complex in Bac Ninh will make products for major US brands and is expected to be operational within a year, Yoshinaga told Bloomberg News.
That investment will add to the US$1.06bil (RM4.76bil) of commitments that GoerTek’s made in Bac Ninh and the north-central province of Nghe An, he added. — Bloomberg
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