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Apple Suppliers Consider Moving Operation to Vietnam to Escape US-China Trade War

Several major Apple equipment suppliers are considering moving production outside of China amidst the US-China trade war.

GoerTek, the Chinese assembler of Apple's wireless headphone AirPods, has informed suppliers that they want to move the AirPods production to Vietnam, reports Nikkei Asian Review.

According to an insider source cited by Nikkei, the AirPods assembler has also asked all suppliers involved with the production of AirPods to confirm if they can ship the materials to Vietnam. Apple has also been informed of the plans, with further discussions pending.

"Apple and its key suppliers are without doubt subject to highly uncertain political risks as the trade battle continues to heat up," said Hong Kong analyst at Yuanta Investment Consulting James Wei.

Cheng Uei, a Taiwanese supplier that produces chargers and connectors for Apple in China, is also considering moving away from the country to escape the potential damage caused by the US-China trade war. Cheng Uei is considering bringing production back to Taiwan as well as to some Southeast Asian countries including Vietnam, Thailand and the Philippines.

"The supply chains there are more developed compared with other emerging markets, while the labor costs are also cheap," said Cheng Uei chairman.

In June 2018, the Trump administration announced 25% tariffs on US$50 billion worth of Chinese goods. China responded with a threat of retaliatory tariffs, which resulted in a 10% retaliation by the US on US$200 billion worth of Chinese goods. Apple's AirPods, Apple Watch and smart speaker HomePod were originally included in the list of Chinese goods subjected to 10% US tariffs but later exempted.

[Photo via Creative Commons]

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