Apple’s iPad & MacBook Production Moves Out Of China, Shifts To Indonesia

Attendees try out the new iPad Pro during an Apple launch event in the Brooklyn borough of New York
Attendees try out the new iPad Pro during an Apple launch event in the Brooklyn borough of New York, U.S., October 30, 2018. (Photo: REUTERS/Shannon Stapleton)

Tensions between the U.S. and Chinese governments have been unfortunately building for months. Although there are brief moments of potential relief, American companies dependent on China may have to prepare for China's retaliation, which is why it isn't surprising why some companies are starting to move out of the country.

According to a report by Indonesia's Detikinet, Apple is already preparing to move out of China. Its iPad and MacBook manufacturing will reportedly move to Indonesia, and changes could start next month.

It has been a challenge for Apple to find a manufacturing partner with sufficient experience to build its products. Furthermore, the Cupertino giant is looking for facilities in a country where low-cost labor is accessible in order to supply U.S. demand for Apple devices.

To that end, it reportedly engaged its longtime contract manufacturer Pegatron, which initially planned the project for Vietnam but couldn't find enough workers in the country. Pegatron is instead subcontracting assembly work to PT Sat Nusapersada in Batam, which says it will ship laptops and tablets to the United States for an unnamed brand.

Pegatron is investing $300 million in Indonesian factories to move out its production from China. In an interview, PT Sat Nusapersada's CEO Abidin Hasibuan said that Indonesian productivity is superior to China's with a comparatively small 2% turnover rate. Indeed, there has been volatility in Apple's labor forces attributed to wage and quality of life issues.

Hasibuan did not deny that the company would indeed start assembling products in June. Though the CEO did not disclose who the client is, the products are said to be shipped to the US.

If the reports are true, products assembled in June could be ready for sale in the American market by this fall, assuming they meet Apple's stringent quality standards, of course. The schedule is just in time with the company's prior October rollout schedule for new devices. Last year, Apple released the new Mac minis, MacBook Airs, and iPad Pros.

Absent changes to its reliance on China for manufacturing its products, Apple faces 25% tariffs in the US on products imported from China, meaning prices could significantly go up in the US. Even with country-specific, tariff-dodging manufacturing switches to other countries, such as Indonesia and India, the company will likely continue to make many of its products for export to other markets in China.

Pegatron is not the only key Apple supplier looking to assemble products outside China: Foxconn has confirmed its own plans to begin mass-production of iPhones in India later this year.

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