Iphone Factory ChinaSource: Apple

What you need to know

  • A Wall Street Journal report has revealed Apple's operations team has long been concerned about its dependency on China.
  • As early as 2015, it was suggested that at least one product should be made in Vietnam.
  • Senior managers "rebuffed" the idea.

A Wall Street Journal piece has revealed that Apple's operations team has long been concerned about the company's dependency on China.

According to the report:

Long before the coronavirus struck, Apple Inc.'s AAPL 9.31% operations team began raising concerns about the technology giant's dependency on China.

Some operations executives suggested as early as 2015 that the company relocate assembly of at least one product to Vietnam. That would allow Apple to begin the multiyear process of training workers and creating a new cluster of component providers outside the world's most populous nation, people familiar with the discussions said.

The report states that senior managers "rebuffed" the idea and that moving away from China was "too challenging to undertake". It continues:

Apple's reliance on China has long frustrated staff—and more recently unnerved investors. The coronavirus represents Apple's third major setback there in as many years, including the fallout from tensions with the U.S. that included tariffs and slower-than-expected iPhone sales in the country.

The coronavirus outbreak has exposed Apple's dependency on China for its products, and worker shortages and travel restrictions have crippled product supply, as well as impacting the timelines for upcoming products.

Syracuse University supply chain professor said

"No executive will admit in a public forum: We should have thought about... But from this point on, there are no excuses."

Whilst Apple has pushed some of its supply chain operation to the shores of India, but this report shows that Apple's operations unit has been concerned about its dependency on China for a long time and that Apple hasn't done enough to diversify its supply chain.

You can read the full report here.