Will Apple abandon China? An “excessive” relationship could cost you $ 8 billion

Apple mainly assembles its products in China and this has caused problems in recent years, including supply chain disruptions in the last quarter. What is now forcing the tech giant to expand elsewhere.

Apple prefers to say that its supply chain is “global” and not overly dependent on China. But the truth is that the company relies heavily on China for manufacturing, and this report caused problems for the company, investors and consumers during the pandemic, Bloomberg reported.

This was particularly evident in the company’s conference call last week, when Apple warned that supply shortages – greatly increased by closures due to COVID-19 in China – would have reduced sales by as much as 8 billion dollars. This is equivalent to losing a full quarter of iPad sales.

During the phone call, CEO Tim Cook reiterated the position that Apple’s supply chain is “truly global,” with products made everywhere, including the United States. But it’s clear that the company can move more manufacturing operations out of China.

Cook hinted that Apple might try to do more, noting that an increasing number of chips are being produced domestically. “We keep looking at improvements,” she said.

In fact, Apple gets many of its components outside of China. The parts that make up the iPhone, iPad, Mac and other products are manufactured in all over the world, from the United States to India, Vietnam and Japan.

But the real obstacle to production is the better known assembly process in Apple and in the manufacturing industry such as FATP. This means final assembly, test and package. The vast majority of Apple devices go through this process in China.

It is a model created by Cook himself, concentrating the assembly in China where components are shipped from all over the world. For decades, this approach has allowed Apple to take advantage of reduced labor costs and supportive government policies and make its way into the Chinese market.

But now Apple is particularly vulnerable to the repercussions of the shutdown due to the COVID-19 outbreak that has hit China. Factories have closed and shipping costs have risen. It was also blocked in multiple regions of China, where Apple has done the final assembly of iPhones, MacBook Pro and other devices in recent weeks.

This means that workers produced the final Apple devices at a slower pace, resulting in reduced inventory and sales in the quarter. in course.

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