Report: Apple considering relocating China plant to Malaysia

A man holds Apple smartphone outside an Apple store in Beijing, China, September 16, 2016. — Reuters pic
A man holds Apple smartphone outside an Apple store in Beijing, China, September 16, 2016. — Reuters pic

PETALING JAYA, June 20 — Malaysia has been named as among several countries being considered by iPhone maker Apple, which is looking to reduce its production capacity in China by between 15 and 30 per cent, Nikkei Asian Review reported today.

Besides Malaysia, the Japanese financial daily reported sources as saying that the US handphone maker is also considering relocating its plants to other South-east Asian countries like Indonesia and Vietnam, as well as India and Mexico.

India and Vietnam were said to be among the favorites for the company’s smartphone diversification amid the US-China trade tensions.

“The trade war has prompted Apple to seriously consider meaningful diversification for the first time.

“At the end of last year, the company began to expand its so-called capital expense studies team, according to sources familiar with the matter. The team of more than 30 people is discussing production plans with suppliers and governments over financial incentives they might be willing to offer to attract Apple manufacturing, as well as regulations and the local business environments,” Nikkei said in its report, citing various sources which it did not name.

According to the news report, main iPhone assemblers Foxconn, Pegatron, Wistron, major MacBook maker Quanta Computer, iPad maker, Compal Electronics, and AirPods makers Inventec, Luxshare-ICT and Goertek all have been asked to evaluate their options outside China.

But no deadline has been set for the suppliers to finalise their business proposals, Nikkei reported, adding that it would take at least 18 months for production to resume after relocation due to the complexities and logistics involved.

China is a key market for Apple as well as a major production centre for its devices. The company gets about 18 per cent of its total revenue from Greater China in the quarter ended March.

Malaysia is hoping to benefit from the ongoing trade war by providing a neutral and cheaper geographical venue for businesses from both the Western superpower and the Asian giant.

Finance Minister Lim Guan Eng said the fallout has boosted Malaysia’s investment by 73.4 per cent year-on-year to RM29.3 billion in the first quarter of this year from RM16.9 billion a year ago, citing foreign direct investment data from the Malaysia Investment Development Authority.

Lim said RM11.5 billion came from the United States and RM4.4 billion from China.

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