Coronavirus is expediting iPhone makers' plans to move beyond China

Decisions by companies like Wistron, Hon Hai, Inventec and Pegatron could reshape tech supply chains

Pedestrians walk past a closed Apple Inc. store on Orchard Road in Singapore on Tuesday, March 24, 2020. Singapore will deliver a supplementary budget and bring forward its monetary policy decision as authorities ramp up support for an economy heading toward recession. Photographer: Wei Leng Tay/Bloomberg

Wistron, one of the Apple’s manufacturing partners, said this week half its capacity could reside outside China within a year.

The declaration underscored how the Asian assemblers that keep the world supplied with iPhones and other gadgets are shifting to a higher gear after the coronavirus showed the folly of staking everything on one country.

The move in taking production out of China has been under way since the trade war between Washington and Beijing reached its zenith last year. Now, coronavirus is expediting that.

Decisions by companies such as Wistron and other Apple partners including Hon Hai Precision, Inventec and Pegatron could reshape tech supply chains.

Taipei-listed Wistron is targeting India – where it is already making some iPhones – along with Vietnam and Mexico, setting aside $1 billion (Dh3.67bn) to fund the expansion this year and next.

"We understand from a lot of messages from our customers that they believe this is something we have to do," chairman Simon Lin said.

“They are happy and appreciate that we can continue to make such a move and they will continue to work with us.”

IPhone assembler Pegatron is also diversifying manufacturing sites. Chief executive Liao Syh-jang said the company hopes to start manufacturing operations in Vietnam in 2021 after setting up a new plant in Indonesia last year and it is further looking at India as a location for new facilities.

Apple’s main assembly partner for AirPods, Inventec, said it is preparing to establish a unit in Vietnam.

More than any other assembler, Hon Hai encapsulated how the coronavirus brought the world’s number two economy to a standstill. Better known as Foxconn, it augurs a potential shift in a global production paradigm that has governed the electronics industry well more than three decades.

The company also has facilities in India, where it began churning out iPhones last year, and Vietnam.

"Trade, the virus, all these things will make the world very different in the next decade," said Alex Yang, the company's investors relations chief.

It is unlikely that China will fully give up its place as the world’s electronics workshop anytime soon. That is because it’s difficult to replicate the intricate network of suppliers, competent workers, efficient distribution systems and large home market that the country offers.

Large-scale relocation of manufacturing capabilities would also take time.

Apple chief executive Tim Cook said in late February that the company was not looking to make any quick moves out of China in light of virus-related supply-chain interruptions.

“We’re talking about adjusting some knobs, not some sort of wholesale, fundamental change,” he said.

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