Share on

Apple is looking into diversifying its supply chain to lessen its dependency on China

Apple to explore diversifying supply chain, reducing reliance on China

Apple is looking into diversifying its supply chain to lessen its dependency on China. - Supply Chain Tribe by Celerity

Apple's CEO, Tim Cook, recently travelled to Vietnam and Indonesia as part of the company's purported efforts to lessen its supply chain's dependency on Chinese manufacturing.

Cook had a meeting with Indonesia's president, Joko Widodo, while he was there. "We talked about the president's desire to see manufacturing in the country and it's something that we will look at," he later told reporters.

"I think the investment ability in Indonesia is endless," he continued. I believe there are many excellent places to invest. We're also making investments. We have faith in the nation.

Reuters claims that Apple has not yet established any production facilities in Indonesia, choosing instead to locate the majority of its major manufacturing operations for iPads, AirPods, and Apple Watches in Vietnam.

The US government's and companies' concerns about an over reliance on China for supply chains are reflected in this investigation into alternatives outside of China. With the US presidential election in a few months and Donald Trump, the Republican nominee, threatening to impose additional taxes on Chinese goods, it appears that businesses are already considering diversification.

Throughout his tenure in office, US President Joe Biden has made steps to fortify the country's supply chains, which the Biden-Harris administration has determined are essential to the country's economy and security. President Biden announced 30 new initiatives in November 2023 to strengthen US supply networks.

The challenges Apple faced during the Covid-19 pandemic could serve as additional motivation for the business to lessen its reliance on China. Further limitations were implemented at Foxconn's iPhone production facility in 2022 as a result of an increase in the virus in China's Henan province. The manufacture of the iPhone 14 Pro and Pro Max was delayed as a result, with the Zhengzhou assembly plant reportedly "operating at a significantly reduced capacity."

Apple may be able to reduce the possibility that events like this in a single nation will have a major negative influence on its supply chain by diversifying.

According to data released by the International Data Corporation (IDC) in April 2024, Apple's market share for smartphones fell from 20.7% in Q1 2023 to 17.3% in Q1 2024 worldwide. During the same period, Apple's smartphone shipments decreased from 55.4 million to 50.1 million units, a 9.6% decrease.

The Chinese market leader, Apple, will make its debut in 2023 after interestingly surpassing companies like Honour, OPPO, Vivo, and Xiaomi in terms of market share.