Apple has a contingency plan if the US-China trade war spirals out of control; they’ll simply make iPhones for the US market outside of China if necessary, according to Bloomberg, citing a senior executive of Apple’s primary manufacturing partner, Hon Hai Precision Industry Co (a.k.a. Foxconn).
Foxconn currently makes the majority of iPhones in the Chinese mainland.
China is a crucial cog in Apple’s business, the origin of most of its iPhones and iPads as well as its largest international market. But President Donald Trump has threatened Beijing with new tariffs on about $300 billion worth of Chinese goods, an act that would escalate tensions dramatically while levying a punitive tax on Apple’s most profitable product. –Bloomberg
Semiconductor division chief and board nominee Young Liu made the comments during a Tuesday investor briefing in Taipei.
“Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the U.S. market,” said Liu, adding that investments are now being made for Apple in India.
“We have enough capacity to meet Apple’s demand.”
Liu also made clear that Apple has not given Foxconn instructions to move production out of China – just that they’ll be able to handle it if that happens.
The company will respond swiftly and rely on localized manufacturing in response to the trade war, just as it foresaw the need to build a base in the U.S. state of Wisconsin two years ago, he said.
It’s unclear if India will ever become a major production base for Apple’s marquee device. Foxconn is now running quality tests for the iPhone Xr series there and plans to begin mass production at a facility in the suburbs of Chennai. Older models are already assembled at a Wistron plant in Bangalore. –Bloomberg
Additionally, Foxconn will employ approximately 13,000 Americans at a new Wisconsin facility in exchange for over $4.5 billion in government incentives – however the project has taken fire over “low-paying jobs, sudden dismissals and ever-changing goals,” according to the report. Company executives reiterated those goals on Tuesday, reporting that construction was still on schedule and as many as 2,000 US workers would be hired by the end of 2020.
Foxconn will also begin making networking and server products for the US market by the end of 2020, while plans to make LCDs are also on track, according to Bloomberg.