Enlarge / The back of the iPad Air 2019.
Samuel Axon
In the face of supply disruptions related to the blocking of COVID, Apple is moving part of the production of iPad from China to Vietnam, according to Nikkei Asia. The company is also taking other steps with its suppliers to soften the blow of supply problems in China.
This is not the first attempt by Apple to move some of its production out of China. Some iPhones have been manufactured in India, a small number of Macs have been assembled in the United States, and Vietnam is already a major factor in the production of AirPods.
Apple was looking to move more production to Vietnam in 2020 and 2021, but had to postpone some of its plans as COVID-19 increases affected the country.
Apple does not feel that moving everything to Vietnam would solve its problems, as Vietnam may also be subject to blockades and other disruptions. And it is unlikely to move most of its supply lines there. But by diversifying into several regions, Apple’s leadership can expect to avoid the most devastating disruptions.
Currently, the company relies so much on specific regions of China that disruptions can affect its ability to ship new iPhones every year. It seems possible that the range of products this autumn will be affected.
Announcements
In preparation, Apple has told its suppliers to start storing specific components “such as printed circuit boards and mechanical and electronic parts.” These stocks can be supported if more stops and interruptions occur in places near Shanghai, where Apple has historically relied to meet the demand for its products.
Stocks may worry some vendors, Nikkei points out, because if a downward trend in consumer electronics demand continues, vendors could be left with unnecessary components. On the other hand, Apple has helped pay the bill to move supplies.
The iPad was the only major product category for Apple to see a year-over-year drop in revenue in its latest quarterly earnings report. CEO Tim Cook suggested in a call with investors that supply-side issues were a factor.
Because the iPad and iPhone use some of the same components, and the iPhone is the most important product for the business, some analysts speculated that Apple may have chosen to prioritize components for the iPhone at the expense of the iPad.
Apple is likely to introduce and ship new iPad and iPhone models this fall.