Apple suppliers are in a rush to leave China, says AirPods maker

GoerTek says that it is investing $280 million in a new plant in Vietnam, as US buyers are pressing it — and all suppliers — to leave China.

In late 2022, GoerTek reportedly lost the contract to manufacture AirPods Pro for Apple. According to Bloomberg, however, it is still producing the regular AirPods, and its deputy chairman says all its customers are pressing for it to move out of China.

"Starting from last month, so many people from the client side are visiting us almost every day," Kazuyoshi Yoshinaga said. "When can you move out? [they ask.]"

Yoshinaga claims that this pressure is coming from US technology firms, and is being directed at all suppliers. "I would say currently 90% of them, they're looking at [moving]," he said. "It's the brand companies' decisions."

As well as firms, including GoerTek, expanding in Vietnam, he says clients are asking about moving operations to India.

"We get requests from our clients almost every month," he said. "'Do you have any plans to expand to India?'"

"If they decide to build up the production lines in India, we may have to think about it seriously," he continued. "Currently we are focusing on developing our Vietnam production facilities."

The pressure to move away from using supply chain companies based in China, comes partly from the need to not be over-reliant on one source. This has intensified in the last year as China's recent extreme COVID measures, and ongoing power supply concerns, have led to factories closing.

Then there is also the trading tension between the US and China.

Apple may never be able to completely withdraw from China, but according to Yoshinaga, suppliers are preparing to move out much faster than expected.

5 Comments

DAalseth 6 Years · 3067 comments

About 1 year ago

Reminds me of the story on AI a year or more ago. Some analyst was saying that Apple wouldn’t be able to move any meaningful part of its manufacturing out of China for at least a decade or more.

Now we just need to move chip fab away from Taiwan.

twolf2919 2 Years · 149 comments

DAalseth said:

Reminds me of the story on AI a year or more ago. Some analyst was saying that Apple wouldn’t be able to move any meaningful part of its manufacturing out of China for at least a decade or more.
Apple may never be able to completely withdraw from China, but according to Yoshinaga, suppliers are preparing to move out much faster than expected.
Now we just need to move chip fab away from Taiwan.

Not sure what you're suggesting - that the analyst was wrong? This article doesn't contradict the analyst - it's simply saying that a minor Apple supplier is expanding its manufacturing in Vietnam. Sort of related, does Apple publish a list of its supply chain partners? I'd venture to guess that the vast majority of parts going into Apple's bread-and-butter product, the iPhone, are still made in China. Even once TSMC's fab in Arizona comes online in a couple years, it'll only fulfill part of Apple's needs - and that Arizona fab will still be using parts made in China.

dk49 9 Years · 284 comments

Excellent video on this subject:

https://youtu.be/nVXBGPcg9zM

twolf2919 said:

DAalseth said:

Reminds me of the story on AI a year or more ago. Some analyst was saying that Apple wouldn’t be able to move any meaningful part of its manufacturing out of China for at least a decade or more.
Apple may never be able to completely withdraw from China, but according to Yoshinaga, suppliers are preparing to move out much faster than expected.
Now we just need to move chip fab away from Taiwan.

Not sure what you're suggesting - that the analyst was wrong? This article doesn't contradict the analyst - it's simply saying that a minor Apple supplier is expanding its manufacturing in Vietnam. Sort of related, does Apple publish a list of its supply chain partners? I'd venture to guess that the vast majority of parts going into Apple's bread-and-butter product, the iPhone, are still made in China. Even once TSMC's fab in Arizona comes online in a couple years, it'll only fulfill part of Apple's needs - and that Arizona fab will still be using parts made in China.

the title of the article says Apple SupplierS, plural. The one is an example but others are doing the same. The last line I quoted also mentions Apple SupplierS. I am literally echoing and amplifying what the analyst in this article was saying.

verne arase 11 Years · 479 comments

Think of what will happen to the supply chain if China invades Taiwan (as they seem to be moving towards).

This is no joke - we may be at war with China if Xi Jinping gets his way. He's been saber rattling since well before Russia's latest adventure, what with his reunification with Taiwan and China's historical rights to everything touching the South China Sea.

The only 3nm production facilities are currently being built in Taiwan - the US facilities will only be for 5nm (or possibly larger), and don't come online for a while yet.

I and a lot of others having been urging Apple to move global production and the supply chain out of China. Facilities remaining in China should just be for local consumption - but Apple due to greed and/or stubbornness has not only remained, but is expanding production in China. Probably has something to do with the multibillion dollar pact Cook signed with China.

I get why Cook wants to stay in China - the supply chain is there and globalization is how he made his bones at Apple.

But all that's out the door if China attempts to invade Taiwan, commits acts of war on its neighbors, or starts delivering lethal aid to Russia.

Any of the above would probably eventually destroy China's economy, but Apple production would be collateral damage. Near term Apple production depends on both an intact China, Taiwan, and the South China Sea.