Apple Seeks to Diversify Supply Chain Outside of China

Apple is taking steps to diversify its supply chain away from China, as tensions between the United States and the second-largest economy escalate.

While China continues to serve as a crucial manufacturing base for Apple, recent moves indicate the company's desire to mitigate risks associated with its reliance on the country. Concerns over potential military usage have led to the US limiting chip exports to China, while China has banned government officials from using iPhones for work purposes.

Two separate reports released on Friday shed light on Apple's efforts to reduce its dependence on China. The Wall Street Journal reported that the tech giant plans to produce at least 50 million iPhones annually in India over the next three years, equivalent to a quarter of its smartphone production. Additionally, Apple will be shifting product development of the iPad to Vietnam for the first time, according to Japanese newswire Nikkei. Despite this move, Apple will continue collaborating with China's BYD, which assembles iPads.

Both reports mentioned sources who preferred to remain anonymous. Apple has yet to respond to requests for comment as of early Friday.

China continues to grapple with regaining growth momentum following the lifting of Covid-19 lockdown measures a year ago. Although export data for November showed a 0.5% increase, ending a six-month decline, this gain remains modest. As a result, Hong Kong's Hang Seng Index experienced a 3% decline this week.

In premarket trading, Apple shares saw minimal change.