Report: Apple Plans to Reduce Production in China

Not these kind of Apples. (Image credit: Shutterstock)

Apple might be looking for some new orchards. Nikkei Asian Review today reported that the company is looking to move between 15% and 30% of its production outside China, and not just because of the ongoing trade war between the People's Republic and the U.S.

That conflict was said to have prompted Apple's decision to move some of its production outside China, however, as the U.S. continues to raise tariffs on goods imported from the country while also applying them to more product categories. This has effectively forced companies to choose between lower margins, higher prices, and making their products elsewhere. Apple is reportedly leaning towards the last option.

There are other factors at play as well. Nikkei quoted an "executive with knowledge of the situation" as saying that "a lower birthrate, higher labor costs and the risk of overly centralizing its production in one country" would lead Apple to make this shift even if the U.S. and China settle their differences. The trade war merely provided the spark needed to light the kindling set by those other problems.

All that kindling might have eventually caught fire anyway. China reported its lowest birth rate in 70 years earlier this year and labor costs have been rising in the country since 2017. Both trends could make it harder to justify manufacturing everything in the country rather than maintaining production lines in multiple countries.

Nikkei's report arrived shortly after Foxconn said it could move all of its production for Apple hardware outside China. The company won't do something that drastic, though. It still makes sense to rely on Chinese factories to make products that won't be sold in the U.S. That way companies should be able to evade U.S. tariffs and reduce their dependence on China without overhauling their entire supply chain.

Nathaniel Mott
Freelance News & Features Writer

Nathaniel Mott is a freelance news and features writer for Tom's Hardware US, covering breaking news, security, and the silliest aspects of the tech industry.

  • The_Capulet
    The whole problem with having production wholesale in china is that China is a developing industrial nation. We've been there ourselves, so we already know what happens. The workforce gets more entitled and demanding. And then the production costs that were once beneficial, are just the same as everywhere else. Except now you have to pay for global distribution to hit the most lucrative markets, alongside paying the tariffs that all of those developed nations have charged forever.

    And then you factor in the humanities issues that china has, making it a volatile workforce market, after other countries raise more tariffs or outright ban them from importing.

    Manufacturing in China is a lose-lose situation. It's just like the housing bubble. Some people got rich off of it. But at the end of the day, it was always going to end, and if you didn't play the market perfectly, you got burned bad.

    Apple is playing the market perfectly here.
  • klockwerk
    Apple flips the finger to a living wage standard for all industrialized countries. Tell me again why they are the darlings of millennials, and better behaved entities are smeared regularly? Oh ya, all that social consciousness is just lip service.