- Tram Ho
Wistron Corp, one of Apple’s manufacturing partners, this week said the company will move half of its production capacity from China within a year. This statement illustrates how manufacturers are forced to change their strategy because they are dependent on one country.
The shift of production from China has been in progress since the US-China trade tensions peaked last year. And now the Covid-19 translation is continuing to accelerate that process. Decisions by companies like Wistron or other Apple partners like Hon Hai Precision Industry Co. , Inventec Corp. and Pegatron Corp. can reshape the technology supply chain.
Wistron is targeting India, where it has made part of the iPhone, along with Vietnam and Mexico. They have set aside $ 1 billion to invest in expanding production this year and next year.
“Many customers have responded to us about this, and we believe that is the right thing to do,” said Simon Lin, President of Wistron. Accordingly, Wistron customers are satisfied if the corporation can accelerate the process of relocating from production from China. “They will continue to do business with us.
Pegatron – iPhone assemblers are also diversifying production sites. CEO Liao Syh-jang said on Thursday that the company hopes to produce in Vietnam in 2021 after setting up a factory in Indonesia in 2019. On the other hand, Pegatron is also looking at India. Pegatron also agreed to buy land and a factory in northern Taiwan on Friday (March 24).
Inventec, the main assembly partner AirPod, also said Tuesday it is preparing to build a new facility in Vietnam.
More than any other assembler, Hon Hai (or Foxconn) has seen firsthand how Covid-19 brought the world’s second-largest economy to a standstill. Foxconn foresaw a change in global manufacturing patterns, which have dominated the electronics industry for more than 30 years. The company also has production facilities in India and Vietnam, in which the factory in India has started producing iPhones since 2019. “Coronavirus will create a very different world in the next decade,” he said. Alex Yang, Director of Investor Relations Foxconn, said.
This does not mean that China will lose its leading position in electronics manufacturing. The reason why other countries find it difficult to meet the supply network, the capacity, the infrastructure or the market size like China. On the other hand, large-scale relocation also takes time to deploy.
In late February, Tim Cook, Apple CEO, said the company would not quickly move out of China just because the Covid-19 pandemic caused supply chain disruptions.
“We’re talking about adjusting some things, not changing the whole or radical supply chain,” he said.
However, the trend of moving production out of China is accelerating, especially small-scale manufacturers. Not only that, device manufacturers for companies other than Apple are also considering shipping production to other countries.
Meiloon Industrial, the speaker manufacturer, said it was looking for an alternative production site and speeding up production to places like Taiwan and Indonesia.
The experience of dealing with the Covid-19 pandemic in China will continue to be transmitted after the Covid-19 epidemic subsided. Accordingly, it raises questions about the globalized business model of modern corporations.
Joerg Wuttke, President of the European Union Chamber of Commerce, called it a warning bell. According to Mr. China used to be the place with the perfect infrastructure for manufacturing and trading. However, it is time to revisit the scenarios to deal with China in the future.
Source : Genk