Apple will stop shipping devices from China to the United States

TF International analyst Ming-Chi Kuo took to his Twitter account to reveal his thoughts on how Apple will eventually reduce its reliance on contract manufacturing facilities in China. Although Apple has produced a few units of the iPhone 14 in India, 80% of iOS products produced by Foxconn in this country are for domestic demand. After all, India has an import tax that would drive up the price of iPhones imported into the country.

But, Kuo indicates thatApple plans to tap Indian group Tata and contract manufacturers Pegatron or Wistron to increase percentage of iPhone units made outside of China. Kuo says that while all MacBook production is currently assembled in China, the main non-Chinese production site for the product going forward, according to Kuo, will be Thailand.

It’s unclear whether Apple’s US customers will be excited about this news, but from a political standpoint, it could be a significant event. Kuo predicts that in 3-5 years, all Apple shipments to the United States could come from assembly plants not based in China. In case you were wondering, Kuo says the United States accounts for about 25-30% of the Cupertino tech giant’s global shipments.

If Kuo is right, this will protect Apple from US tariffs on Chinese imports, which are nothing more than an import tax paid by US companies or their customers (in the form of higher price). Eventually (what Kuo calls the “long term”), Apple will supply its devices worldwide from non-Chinese manufacturing plants, except for consumers living in China. These will be supplied by Apple products coming off the assembly line in China.

It sounds like a well-crafted plan, but the question is whether it can be done. With Kuo’s background, one can imagine that anything he says has a good chance of coming true. In summary, Apple may be able to continue production of its devices without fear of being caught up in an escalating trade war between the United States and China.

More real questions!

This does not mean that everything will be perfect. Apple still has to worry about what might happen if China invades Taiwan, given that Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) manufactures the chips designed by Apple. TSMC is the largest foundry in the world and Apple is responsible for around 25% of its revenue. China is dying to be self-sufficient when it comes to chips and that could still be a major concern for Apple and the US government in general.

Moving the production of its devices out of China would be a start. Among the places that would be considered, in addition to India, are Mexico and Vietnam.. There are two things Apple needs to confirm before deciding where to move its production facilities. Is there a supply chain capable of delivering products in the quantity and quality that Apple wants? Is there a local workforce that can be relied on for the assembly lines?

And, of course, Apple’s contract manufacturers, like Foxconn, must have facilities in the country where the company decides to shift production. Such a major move will no doubt be stressful and could come at quite a high cost. But in the long run, it would definitely be a good move for Apple.

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