Apple suppliers shift output out of China as trade tensions rise

“Apple Inc.’s main assemblers are shifting more output to India and Southeast Asia as trade tensions threaten to escalate costs in their longstanding production base of China,” Debby Wu reports for Bloomberg. “Hon Hai Precision Industry Co., known also as Foxconn, said over the weekend it’s investing more than $200 million in India and Vietnam. Smaller rival Pegatron Corp. said Sunday it’s moved to Indonesia some manufacturing of networking gear hit by rising U.S. tariffs on Chinese imports, and is now exploring bases in Vietnam and India as well.”

“‘We have begun shipping from Batam island, Indonesia, in January,’ Pegatron Chief Executive Officer Liao Syh-jang told reporters on Sunday. ‘Whether the U.S. will decide to go ahead with new tariffs on March 1 will be a key impact on the speed of the company’s further diversification,'” Wu reports. “On Saturday, Hon Hai said via a series of filings that it had injected some $213.5 million into an Indian unit, and paid for rights to use 250,000 square meters of land in an industrial park in Vietnam’s northeastern Bac Giang Province for operations and sales.”

Read more in the full article here.

MacDailyNews Take: Hopefully pressure points such as these lead to a comprehensive U.S.-China trade deal.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006

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