Apple has gotten so exasperated that they shifted some iPad production out of China for the first time!
Here is what we know so far…
Exasperated Apple Shifts Some iPad Production Out Of China!
Apple has reportedly shifted some of its iPad production out of China, over the COVID-19 pandemic lockdown in Shanghai.
Strict lockdowns in and around Shanghai after a surge in COVID-19 cases have led to months of supply chain disruptions for Apple, even though their factories operated in a closed loop.
Apple built production lines in Vietnam with the help of China’s BYD, and will “soon start to produce” some iPads there.
Apple had asked Foxconn to move iPad and MacBook Pro production from China to Vietnam in 2020, with plans to manufacture a significant proportion of iPads there. However, a COVID-19 surge in 2021 delayed those plans.
Even though China has started to lift their Zero COVID restrictions in Shanghai, Apple is unlikely to reverse these plans to shift production to Vietnam.
This will be the second major production line to shift to Vietnam. Apple shifted almost 30% of AirPods production to Vietnam in the second quarter of 2020.
Apple Also Asked Suppliers To Build Up Inventories
Apple also asked multiple component suppliers to build up their inventories, to prevent supply chain disruptions from affecting production.
One of the people with direct knowledge of this issue said :
For example, component supplier X has a 40% share of Apple’s business in Jiangsu Province, which is a risky region of supply chain disruption, and supplier Y in another city accounts for the remaining 60% share.
Apple would want supplier Y to build enough additional components to match supplier X’s 40% share in the coming months in case production in Jiangsu is shut down again.
If China continues with its Zero COVID policy, it is likely that Apple and other companies will seriously look at shifting more of their production to other countries.
Supplies of electronics from China’s factories have been severely impacted by their strict COVID-19 lockdowns, even though some factories are allowed to use a closed loop system.
There is also worker welfare to consider – there is only so much they can tolerate the closed loop system, where workers are restricted to factory campuses for weeks on end.
In early May, workers at the Quanta factory producing MacBook laptops in Shanghai rioted over the closed loop system, and fled the factory.
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