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Apple plans to take iPhone production out of China

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Apple iPhone production

iPhone maker Apple is planning to withdraw its Apple iPhone production from China, considering the prospect of moving the iPhone production in India with the long-term goal of buying chips in the U.S. itself, in Arizona, writes Business Insider.

In this case, according to experts, Apple is unlikely to be followed by other manufacturers of consumer goods, even despite the protests related to the restrictions COVID-19 in China, which suggest revising the supply chain.

Various changes and crises over the past 5 years have led to this idea of moving Apple’s production, which has pointed to the need to bring production closer to the end consumer.

Despite the tariffs still in place, introduced back in 2018 by the Trump administration, there has been increasing talk of reducing U.S. dependence on China, which has been reflected in decreasing China’s share of U.S. imports. But the big jump in U.S. manufacturing recorded by the consulting firm Kearney’s Reshoring Index negated any progress as it bottomed out in 2021 since the 2008 financial crisis. Since then, the U.S. has fallen into an even greater dependence on Asian manufacturing, where China has the lion’s share.

Many U.S. firms are reviewing their sourcing strategies in China, with the most common strategy being “China + 1,” that is, sourcing in China with a backup source in another country, such as Vietnam or India, as in the case of Apple. China cannot yet be abandoned because that country has years of manufacturing experience and a suitable ecosystem that makes it an easy and cost-effective place to produce, where raw materials, machines and expertise are available in one place. The iPhone City is an example of this.

Conservative predictions say that if Apple acts decisively enough, it will be able to move 20% of its supply chain out of China in 8 years. More optimistic forecasts say that it will take at least 3 years to withdraw half of its capacity.

As for the U.S. government’s attitude toward changing production, President Biden has repeatedly stated that a reliable domestic supply of microchips is a vital U.S. security issue even before the signing of the Microchip Act in August, which allocated over $50 billion to the industry. At the same time, supplies of sneakers or toys are not a national security issue.

Earlier, we reported that the global computer market was predicted to continue falling in 2023.

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