Apple Inc. urged the Trump administration not to proceed with tariffs of as much as 25 percent on a new slate of products imported from China, saying it would reduce the company's contribution to the US economy.
In a testimony earlier this week, the U.S. Semiconductor Industry Association (SIA) expressed its deep concern with the proposed tariffs, saying that the economic consequences for the U.S.
The iPhone assemblers Foxconn, Pegatron, Wistron, MacBook maker Quanta Computer, iPad maker Compal Electronics, and AirPods makers Inventec, Luxshare-ICT and Goertek all have been asked to evaluate options outside of China, multiple sources told the Nikkei.
China is a crucial cog in Apple's business, the origin of most of its iPhones and iPads, as well as its largest worldwide market, but US President Donald Trump has threatened Beijing with new tariffs on about US$300 billion of Chinese goods, an act that would escalate tensions while levying a punitive tax on Apple's most profitable product.
Apple reportedly declined to comment on the report.
Multiple sources told Nikkei that the trade war is what triggered the request, but there won't be any turning back even after a deal between the U.S. and China is made. Do you welcome Apple to open a factory for iPhones?
The report cites several unnamed sources with "knowledge of the situation", though it's unclear if any of those people work at Apple or its major contractors for the assembly of iPhones and iPads like Foxconn.
The Taiwanese contract manufacturer makes most of the smartphones in China and is that nation's largest private employer.
A deadline has not been set for the suppliers to finalise their business proposals, Nikkei said, adding that it would take at least 18 months to begin production after choosing a location. Tariffs will affect almost all major Apple products, including iPhones, iPads, MacBooks, Apple Watches, AirPods and the iMac, the company wrote.
As disruptive as the process may be, suppliers seem ready to move.
Apple is an outsized figure in that negotiation.
Aside from the risk of tariffs, other factors are contributing to Apple's possible decision to move out of China.
Apple says as Chinese producers do not have a significant presence in the United States market, the tariffs would only damage Apple's competitiveness. Furthermore, most of Apple's products will still be made in China, the report notes. "We have enough capacity to meet Apple's demand".