Apple Wants to Increase Production Outside of China, Report Says

The pandemic has led to supply-chain traffic jams.

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Artfully distorted fisheye-lens view from above and behind the large, lighted Apple logo on the window of an Apple store in Beijing. A crowd of people is visible outside, in the plaza below.

An Apple store in Beijing, China, in 2012.

Feng Li/Getty Images

Apple is reportedly telling some of its manufacturing contractors that it wants to increase production outside of China, pointing to COVID lockdowns as one reason for the shift. India and Vietnam are high on the list of sites for potential manufacturing increases, The Wall Street Journal said in a Saturday report based on information from anonymous sources.

Over 90% of Apple's products are made in China by contractors, the Journal noted, but tensions between China's communist government and the US make the company's reliance on China risky, and COVID lockdowns in China have led to supply-chain snarl-ups. In April, Reuters reported that lockdowns in areas of China could mean a shortfall of millions of iPhones.

In 2019, the Journal reported that Apple was considering moving a significant amount of the production of some of its gadgets to other countries, amid trade tensions between China and the United States. The outlet's Saturday report said the pandemic interfered with those plans but that Apple has renewed its focus on the issue.

Yet China remains a tempting place to make devices, the Journal noted, because of the country's solid manufacturing ecosystem, skilled workers and low costs, as well as its huge domestic market for gadgets. About one-fifth of Apple's global sales are often attributed to China, the Journal said.

Apple considers India the next best site, because of its low costs and large population, the Journal reported. iPhones are already being made there for the domestic market, with sales of Apple products in India quickly increasing.

But China-based contract manufacturers can have trouble setting up in India due to strained relations between the two countries' governments, the Journal said, which makes Vietnam and other Southeast Asian nations attractive sites.

Apple didn't respond to a request for comment.