Apple suppliers spend billions diversifying from China

These concerns have led to Apple suffering a considerable loss of earnings as a direct result of China, further influencing this shift to other countries. "Over the last four years since the start of the pandemic, we estimate Apple's revenues have been impacted by over $30 billion," according to TD Cowen's report.

As a result, Apple and its 188 key suppliers are making investments to speed up the relocation plan. However, the plan also comes with a cost. It is estimated that Apple's suppliers have spent around $16 billion on diversifying production assets away from China to India, Mexico, the US, and Vietnam since 2018.

"While supplier relocation entails higher costs near-term, we believe there will be long-term cost benefits once the ex-China capacity is fully at scale," said the report. "We envisage a multi-year process before Apple sees full operating margin benefits as partners leverage the local labour pool."

TD Cowen estimates that it will take up to 18 months for a company to establish a new manufacturing plant, and potentially even longer to organise the whole supply chain. "If even one critical component cannot be produced away from the region that the supply chain is relocating from, then the move will only be partial," according to the analysis.

TD Cowen has analysed over 1,000 financial filings, using numbers from key firms such as Foxconn, Pegatron, Luxshare Precision, Wistron, and Compal. The majority of iPhone production remains centred in China, but recent investments in India are only just beginning to create a new manufacturing hub from which the company could export large volumes to the US. India is quickly becoming a major consumer of the iPhone, and increased localised production would reduce distribution logistics costs and improve affordability as import tariffs do not apply.

By contrast, Mac and iPad are making good headway with new manufacturing capacities in Southeast Asia. Supply chain field work suggests Vietnam has evolved into a major production hub for computers recently, and small volumes of MacBooks, iPads, and the Apple Watch are already being manufactured there.

TW Cowen estimates that capacity in Vietnam can support about 40 per cent of annual US Mac/iPad demand. While this is good progress, additional capacity is still required to meet US consumption needs.

Apple supplier Luxshare-ICT injects $330 million into Bac Giang Through its Vietnamese subsidiary, the Apple supplier Luxshare-ICT is pouring an additional $330 million into its electronic component manufacturing project in the northern province of Bac Giang.

Apple to shift iPad development resources to Vietnam Tech behemoth Apple Inc. is for the first time planning to allocate product development resources for its iPad range to Vietnam, according to sources cited by Nikkei Asia. This move marks a significant shift in the tech giant's manufacturing strategy.

Foxconn gains projects worth $246 million in Quang Ninh Quang Ninh People's Committee has granted investment certificates for two Foxconn projects worth more than $246 million in Song Khoai Industrial Zone (invested by Thailand’s biggest industrial developer Amata) and Quang Yen Economic Zone.