Apple continues to rethink supply chain to get around US-China tensions

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

Apple’s division of its supply chain into one part aimed at the China market and the other aimed at the rest of the world continues apace. The goal? Helping Apple get around rumbling trade tensions between the United States and China.

According to a Friday report from Digitimes, Apple is giving more orders to Chinese firms Luxshare Precision and BYD for the Apple Watch Series 6 and Wi-Fi iPad series, respectively.

The report notes:

“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 should help the company skirt some tariffs, which hit Apple’s largely China-centered supply chain. Last year, a report suggested that Apple has asked its suppliers to explore manufacturing outside China. Based on newer reports, it seems 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 just 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? There’s a reason operations wizards like Apple CEO Tim Cook get paid so much after all.