Fearing China’s blockade measures, Apple moved iPad production to Vietnam

According to a source from Nikkei Asia, Shanghai’s strict blockade measures to curb the Covid epidemic are forcing Apple to first bring iPad production outside of China and shift to Vietnam due to concerns about disruption. extended supply segment.

Sources said that Apple is also asking component suppliers to accumulate a large amount of inventory to prevent shortages and decrease in supply in the future.

According to Nikkei, BYD, one of the leading iPad assemblers for Apple, is helping the tech giant build a production line in Vietnam and may start producing a small number of these tablets there.

If this happens, the iPad will be the second major Apple product line assembled in Vietnam, after the AirPods wireless headphones. This move not only shows Apple’s relentless efforts to diversify its supply chain, but also shows the growing importance of Vietnam to this technology company. Last year, Apple shipped 58 million iPads, with the majority of suppliers concentrated in China.

According to Nikkei, last January, Apple considered moving iPad production to Vietnam, but the sudden increase in Covid cases a few months later interrupted this plan.

In addition to diversifying production locations, to further protect the supply chain from disruptions, Apple is asking suppliers to add additional sources of supply for components such as printed circuit boards, mechanical and electronic parts, especially parts manufactured in the Shanghai area.

Not only that, Apple also requires suppliers to ensure the supply of chips, especially power-related chips, for upcoming iPhones. Specifically, Apple is asking suppliers outside of the blockade to stock up on inventory that can be used for months. This requirement applies to all Apple product lines – iPhone, iPad, AirPods, and MacBook.

However, a Nikkei source said it would be risky for any supplier to fully comply with Apple’s requirements when there are signs that demand for consumer electronics is slowing. due to inflation and rising energy costs. If Apple doesn’t use up this inventory, suppliers could be abandoned.

One supply chain executive told Nikkei: “That additional stockpile could become a huge burden for suppliers if other suppliers’ production is not disrupted by the blockade again..” At the same time, he added that, while most suppliers agree to increase stockpiles, “certainly not” increase supply enough to make up for shortfalls of other competitors.

Meanwhile, the Shanghai government said it will further reopen the city from June 1, with a focus on helping businesses return to normal operations.

“We will lift any unreasonable restrictions so that companies can resume operations and production.” The government statement said. The city also said it will subsidize costs to companies because of Covid prevention measures.

Refer to Nikkei