Supply Chain

COVID Delays Apple’s Production Shift Away from China

The tech giant is slowing plans to move production to Vietnam as border controls tighten to contain new variants of coronavirus outbreaks.
Lauren MuskettAugust 18, 2021

Apple is slowing plans to shift production from China to Vietnam as governments tighten border controls to contain outbreaks of new variants of the coronavirus, Nikkei Asia reported on Tuesday, citing sources. 

What Happened: The Cupertino, California-based tech giant plans to start mass production of its latest AirPods earphones in China instead of Vietnam as previously planned.

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Apple reportedly still aims to move around 20% of new AirPods production to Vietnam at some point in the future.

AirPods were among the first products that Apple began making in significant amounts in Vietnam after moving production there about two years ago during the peak of U.S.-China trade tensions. 

The Tim Cook-led company’s plan to bring some MacBook and iPad production to Vietnam has also been put on hold. 

Apple is not alone, as other tech biggies such as Google parent Alphabet and Amazon are facing similar delays, the Nikkei noted.

Why It Matters: Vietnam’s young labor force made it an ideal draw for U.S. based tech manufacturers, especially when Washington began imposing punitive tariffs on Chinese-made goods in 2018. Suppliers of Apple, Google, Amazon, Microsoft, and Dell Technologies have already set up or expanded factories in the country over the past few years. 

Both China and Vietnam have adopted stricter border control measures this year, which has slowed the production shift between the two countries due to COVID-19 resurgence and government measures. 

Price Action: Apple shares closed 0.62% lower at $150.19 on Tuesday.

This story originally appeared on Benzinga. © 2021

Benzinga does not provide investment advice. All rights reserved.

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