Tech Companies Slowly Shift Production Away From China

In the coming weeks Tech Companies , Apple and Google will unveil their latest generation of smartphones, jockeying to distinguish the new devices from previous models. But one of the most significant changes will go largely unnoticed by consumers: Some of these phones will not be made in China.

A very small portion of Apple’s latest iPhones will be made in India, and part of Google’s newest Pixel phone production will be done in Vietnam, people familiar with their plans said. The shift is a response to growing concerns about the geopolitical tensions and pandemic-induced supply chain disruptions that have involved China in the last few years. China has long been the world’s factory floor for high-tech electronics, unrivaled in its ability to secure legions of high-skilled workers and the production capacity to handle demand for the next hot device. But American companies are seeing more risk there — a perspective forged during the Trump-era trade war, with its tit-for-tat tariffs, and cemented by China’s saber-rattling after Speaker Nancy Pelosi’s visit to Taiwan last month. They fear that basing a supply chain largely in China may thrust them into the middle of its escalating conflict with the United States over Taiwan. China is still, by far, the most dominant consumer electronics manufacturer. But it’s not just smartphone production that is moving out the country. Apple is producing iPads in northern Vietnam. Microsoft has shipped Xbox game consoles this year from Ho Chi Minh City. Amazon has been making Fire TV devices in Chennai, India. Several years ago, all of these products were made in China.Tech Companies, On Wednesday, China announced that factory activity contracted for a second straight month in August, according to the country’s closely watched survey of purchasing managers. “The empire of manufacturing in China is being shaken,” said Lior Susan, founder of Eclipse Venture Capital, which invests in hardware and manufacturing start-ups. “More and more capital is going to pull manufacturing out of China and find an alternative.” The fracturing supply chain is rippling across Asia, causing a spike in industrial land prices in Vietnam, a revival of manufacturing in Malaysia and a surge in demand for low-wage workers in India. For China, Tech Companies ,it is siphoning away manufacturing activity when the country is reeling from its slowest economic growth in decades.

Source: The New York Times