Apple has told some of its contract manufacturers it wants to increase production outside of China, the Wall Street Journal reported, citing people familiar with the matter.
India and Vietnam, which are already Apple manufacturing sites, are among the countries shortlisted by the company as alternatives, the report said.
Apple forecast bigger supply problems last month as COVID-19 lockdowns slowed production and demand in China.
The report said Apple cites China’s strict anti-COVID policy and other reasons for its decision.
Apple declined to comment on WSJ and was not immediately available to Reuters on Saturday.
Apple supplier Foxconn had forecast a tough quarter for the parts maker earlier this month. Foxconn warned that current quarter sales for its electronics business, including smartphones, could decline as growth slowed due to rising inflation and demand cooling in locked-in China, as well as escalating supply chain problems.
The Taiwanese company, the world’s largest contract electronics manufacturer, has, like other global manufacturers, struggled with a severe chip shortage, which has hurt smartphone production, including for its main customer Apple.
While the company reiterated that the COVID-19 controls in China had only a limited impact on production as it kept workers on site in a “closed-loop” system, demand for its products in the country has suffered as people stay locked up. The slowdown has recently been exacerbated by a downturn in key markets due to high inflation and the war in Ukraine.
© Thomson Reuters 2022