In the face of supply disruptions related to the COVID lockdown, Apple is moving some iPad production from China to Vietnam, according to Nikkei Asia. The company is also taking other steps with its suppliers to mitigate the impact of supply issues in China.
This isn’t Apple’s first attempt to move some of its manufacturing out of China. Some iPhones have been made in India, a small number of Macs have been assembled in the United States, and Vietnam is already a major factor in AirPods production.
Apple planned to move more production to Vietnam in 2020 and 2021, but it had to put some of its plans on hold as the country was hit by the COVID-19 surge.
The company is now so dependent on certain regions in China that failures in those regions could affect its ability to ship new iPhones every year. It already seems likely that this fall’s product line will be affected.
To prepare, Apple reportedly ordered its suppliers to begin stockpiling certain components, “such as circuit boards, mechanical and electronic parts.”Those stocks can be relied upon should there be further outages and disruptions at facilities near Shanghai, where Apple has historically relied on meeting demand for its products.
Inventory may be a concern for some suppliers, Nikkei notes, as if the downward trend in consumer demand for electronics continues, suppliers could be left with unwanted components. On the other hand, Apple has reportedly helped pay for the cost of moving supplies.
The iPad was the only major Apple product category to see revenue drop year-over-year in its most recent quarterly earnings report. CEO Tim Cook suggested in a conversation with investors that supply issues were a factor.
Because the iPad and iPhone use the same components, and the iPhone is the company’s more important product, some analysts have suggested that Apple may have decided to prioritize iPhone components at the expense of the iPad.
Apple is likely to introduce and ship new iPad and iPhone models this fall.