Apple is reportedly moving iPad production out of China for the first time ever because of Trump's trade war

Reuters,Isobel Asher Hamilton
apple tim cook
Apple CEO Tim Cook. MANDEL NGAN/AFP via Getty Images
  • Major Apple supplier Foxconn is moving some production of the iPad and Macbook from China to Vietnam, a source told Reuters.

  • The source said Apple requested the move as a way of making its supply chain less reliant on China, following the trade war between the nation and President Donald Trump's administration.

  • This will be the first time the iPad has been manufactured outside of China.

  • Visit Business Insider's homepage for more stories.

Major Apple supplier Foxconn is moving some iPad and MacBook assembly to Vietnam from China at the request of Apple, a person with knowledge of the plan told Reuters, as the US firm diversifies production to minimize the impact of a US-China trade war.

The development comes as the outgoing administration of President Donald Trump encourages US firms to shift production out of China. During Trump's tenure, the United States has targeted made-in-China electronics for higher import tariffs, and restricted supplies of components produced using US technology to Chinese firms it deems a national security risk.

Related: The rise and fall of the iPod

Apple was able to skirt some the tariffs, but it seems the iPhone-maker is wary that being dependent on China for its global supply chain, which could make the company vulnerable to geopolitical forces.

Apple's dependence on China was also thrown into stark relief at the beginning of the coronavirus pandemic, as the outbreak caused major disruption in the company's supply cahin.

Foxconn is building assembly lines for Apple's iPad tablet and MacBook laptop at its plant in Vietnam's northeastern Bac Giang province, to come online in the first half of 2021, the person said, declining to be identified as the plan was private.

The lines will also take some production from China, the person said, without elaborating how much production will shift.

"The move was requested by Apple," the person said. "It wants to diversify production following the trade war."

Foxconn said in statement: "As a matter of company policy, and for reasons of commercial sensitivity, we do not comment on any aspect of our work for any customer or their products".

Apple did not immediately respond to a request for comment.

Taiwan's Foxconn, formally Hon Hai Precision Industry Co Ltd, on Tuesday announced a $270 million investment to set up a new subsidiary called FuKang Technology Co Ltd -- a move the person said was aimed at supporting the Vietnam expansion.

Shifting iPad production to Vietnam will mark the first time Foxconn has assembled the device outside of China.

This isn't the first indication we've had that Apple is looking to seed its global supply chain beyond China.

The firm already plans to spend up to $1 billion expanding an iPhone assembly plant in India as "strongly requested" by Apple to diversify production beyond China, people with direct knowledge of the matter told Reuters in July.

Foxconn and peers such as Pegatron Corp are also considering building plants in Mexico, people with knowledge of the matter said, as Washington promotes near-shoring production.

Foxconn Chairman Liu Young-way in August told investors the US-China trade war had split the world into two, saying his firm aimed to provide "two sets of supply chains."

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