Apple has been diversifying its supply chain outside of China; it’s already been known by everyone for some time. But other tech companies like Google, Amazon, and Microsoft are also “slowly” moving production out of China, along with Apple. The reasons for this shift seem like the growing tension between the U.S and China.
Tech companies have decided to move productions to Vietnam, Malaysia, India and Taiwan as alternatives to China to produce various electronic products. Some of the new iPhones and other smartphones won’t be manufactured in China. A very small portion of Apple’s latest iPhones will be manufactured in India, and part of newest Pixel smartphone production will be made in Vietnam, according to the people familiar with these companies’ plans. But it’s not just smartphone production that’s leaving China. iPads are produced in northern Vietnam, Microsoft’s Xbox game consoles in Ho Chi Minh City, and Amazon’s Fire TV devices in Chennai, India. Several years ago, all of these products were made in China.
Tech companies are leaving China for three main reasons: geopolitical tensions, shutdowns, and rising labor costs. The shift is a response to growing concerns about geopolitical tensions and pandemic-induced supply chain disruptions that have engulfed China in recent years. And, the growing tension between the U.S and China forces tech companies to move production to a safer and more stable country. Also, the annual income of workers in China’s manufacturing industry has tripled over the past ten years to over $9,300. So, it’s not only political but also financial.
American companies see China as a risky area. After House Speaker Nancy Pelosi visited Taiwan last month, geopolitical tensions became the biggest concern for the companies. They worry that basing a supply chain heavily on China will put them at the center of their growing conflict with the United States over Taiwan. However, manufacturing in China will not end but rather be reduced as it remains the most dominant consumer electronics maker.