Apple continues to rethink supply chain to get around U.S. and China tensions

Tim Cook speaking with a person on the iPhone production line.
Photo: Apple

Apple’s division of its supply chain into one aimed at the China market and the other aimed at the rest of the world continues apace. This is to help Apple get around rumbling trade tensions between the U.S. and China.

According to a new report published by Digitimes Friday, Apple is giving more orders to Chinese firms Luxshare Precision and BYD for the Apple Watch Series 6 and WiFi iPad series, respectively.

The report notes that:

“In the wake of the US-China trade tensions, Apple is now seeking more Chinese suppliers to satisfy China’s domestic demand, while for non-China markets, Apple will rely more on Taiwanese makers to help it establish production sites outside of China.”

Foxconn and Compal, both Taiwanese companies, are currently the main suppliers for the new Apple Watch and iPad. However, it seems that Apple is shifting some orders over to Luxhare and BYD. This is to help it get around challenges regarding tariffs. These have impacted Apple’s largely China-centered supply chain. Last year, there was a report suggesting that Apple has asked its suppliers to explore manufacturing outside China. Based on newer reports, it seems that the company is instead splitting its production line to cater for local markets.

Apple’s international supply chain

The report also gives a sense of how international Apple’s supply chain is getting:

“Apple is currently having Quanta and Foxconn manufacture Mac series products in the US. In India, Foxconn, Wistron and Pegatron are set to manufacture iPhones locally to mainly cater to domestic demand. In Vietnam, Compal, Foxconn, Pegatron and Inventec have plants manufacturing iPads, AirPods and iPhones at the moment.”

2020 has been a challenging year for manufacturing, largely due to the effects of the coronavirus pandemic. However, it seems that Apple also has to deal with geopolitics when it comes to its supply chain — as seen earlier this year when Apple components ran into problems while being transferred from China to India.

Who would think that running a multinational manufacturing business would come with so many headaches? It seems there’s a reason operations wizards like Tim Cook get paid so much after all.