The trade war of US President Trump against China forces some US companies to find interim solutions. Even the largest are affected by this. Apple is now planning to move part of its iPhone production to neighboring Mexico. Will this please President Trump?!
Partial production in Mexico
Behind the production of the iPhone is not Apple itself, but the two suppliers Foxconn and Pegatron. They are obviously tired of continuing to produce mainly in the Far East due to the still ongoing trade war between the USA and China. For this reason they are moving part of their production to the “near south”. More precisely to Mexico, as reported by Reuters. Of course, the Californian company does not want to move the entire production to Mexico. But even that will not please Trump. After all, an anti-Mexico policy was already part of his election campaign almost exactly four years ago. He is particularly keen to have production in his own country. But Foxconn and Pegatron will not be diverted from their plans. In fact, they are said to be already in solid negotiations. Understandably so, as one must say. After all, production abroad is primarily associated with far lower costs for US companies.
Mexico not an isolated case ?
Possibly the long-lasting trade war between the USA and China will soon come to an end. But should Apple’s production then migrate back to China? Most likely not. After all, leaving the land of the rising sun has other advantages for the Group. For example, its future production facility in Mexico is much closer to the company’s headquarters in California. But probably most important of all is the independence from China. But of course there will not be enough room in the comparatively small Mexico for the large production facilities from China. But Apple has probably already thought about other alternatives. For example, it is an open secret that production facilities from China may possibly move to Vietnam or India.
Corona crisis as food for thought
Until now, the production of the iPhone has been heavily dependent on China. The Corona crisis has once again highlighted this dependence for Apple as a negative example. After the outbreak in Wuhan, plants across the country had to close or could only operate to a limited extent. As a result, the functionality of Apple’s supply chain was on the brink. Consequently, it can only be of benefit to the company if it fights for a large measure of independence from China. Furthermore, a more global distribution of production sites would protect the company from the effects of future pandemics or similar developments. At the very least, this would put a stop to delivery problems.