What?
- Wistron Corp., a manufacturing partner of Apple, has said this week that it could move half its production capacity outside China to countries like India and Vietnam.
- iPhone and Airpods assemblers, Pegatron and Inventec, have also said they’re looking to expand manufacturing capacity abroad.
Why?
- Since the global coronavirus pandemic began, investors and companies appear to be disillusioned with the idea of depending on one country exclusively for supply chain requirements.
- The trade war between America and China that began last year is likely to worsen beyond this crisis.
- Wistron Chairman Simon Lin has said that increasing manufacturing capacity outside China is what they’ve been told through ‘a lot of messages’ from customers who ‘believe this is something’ they have to do.
What now?
- Wistron already manufactures iPhones in India and has earmarked $1 billion for expansion here and in Vietnam and Mexico.
- Pegatron is looking to begin operations in Vietnam in 2021 and is interested in setting up facilities in Indonesia and India.
Why do I need to know this?
- The global paradigm of manufacturing as it stands could change after things settle with the coronavirus pandemic.
- Chinese manufacturers are under pressure to distribute their manufacturing across geographies to prevent this kind of situation.
- Apple’s Tim Cook has said in a guarded statement that they’re ‘talking about adjusting some knobs’ with no ‘fundamental change’.
- However, Alex Yang, the investors relations chief of Foxconn, has told investors in a call that the virus ‘will make the world a very different place in the next decade’.
