Apple is considering moving up to 30 per cent of its Chinese production processes elsewhere as it braces for further escalations in the US-China trade war, Nikkei Asian Review has reported.
The Californian tech giant has asked manufacturing suppliers such as Foxconn to assess the potential cost implications of the withdrawal, according to Nikkei.
The move comes just weeks after the latest round of talks between Washington and Beijing collapsed. The US is now threatening to add 25 per cent tariffs to a further $300bn of Chinese imports.
The pending intervention would force Apple to significantly raise the price it charges US consumers or see its profit margins tumble.
But one source told Nikkei, a Japanese publisher which owns the Financial Times, that Apple was likely to proceed with the move even if the US did not follow through on its threat.
The iPhone maker, which has outsourced a significant proportion of its production to China, is reportedly concerned about the falling Chinese birth rate and rising labour costs, as well as the risks associated with focusing production in one country.
Apple suppliers are assessing a transfer of 15 to 30 per cent of their Chinese manufacturing processes to countries such as Mexico, India, Vietnam, Indonesia and Malaysia, according to Nikkei. Apple did not immediately respond to a request for comment.
The trade war is one of several threats facing Apple, which reported a revenue drop of five per cent year-on-year in the first quarter of 2019. The company is battling to compete with Samsung and a number of Chinese smartphone manufacturers.
Huawei overtook Apple to become the world’s second biggest smartphone brand last year. But it is one of the Chinese tech companies which has been hit hardest by the trade war. It emerged earlier this week that international sales of its smartphones fell by 40 per cent in the past month.