Apple is accelerating the withdrawal of its production from China, in favor of India and Vietnam

On April 29, 2022, Apple’s stock fell 3.7% at the time of the publication of the results for the first quarter of the year. Semiconductor supply constraints are having a negative effect on the Cupertino company. This crisis, which has lasted for more than two years, and the new Chinese confinements, are probably tending to accelerate Apple’s abandonment of China.

Apple could leave China for India and Vietnam

According to South China Morning Post, the zero covid policy currently applied by the Chinese government tends to annoy Apple. This situation prompted the company to accelerate its withdrawal from China. The apple brand could transfer the majority of its factories to India and Vietnam. Apple’s supply chains in China have been hit hard by the strict shutdowns imposed in Shanghai and several neighboring provinces. This health policy annoys Tim Cook and his teams and clearly pushes the American giant to leave China faster than expected.

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On Thursday April 28, just before the publication of the company’s quarterly results, Tim Cook warned his shareholders, telling them that Apple “was not immune to supply chain issues”. He explained that the iPad had in particular experienced very significant supply constraints during the last trimester. According to the iPhone maker’s chief financial officer, Luca Maestri, second-quarter sales could also be affected, to the tune of $4 billion to $8 billion. Unsurprisingly, the Apple brand’s stock fell about 3.7% Friday, after the publication of the results.

Semiconductor shortages continue to affect many markets

Apple is also worried a probable knock-on effect of reduced demand consumers in China, due to the lockdowns. Semiconductors have become indispensable components for technology companies. They are present in all devices, from toasters and kettles to fighter jets and game consoles. Of course, Apple is not the only company to be affected by this crisis. Nokia CEO Pekka Lundmark said his company could have grown faster in the first quarter of 2022 had it not been for supply chain issues. According to him, “The situation has stabilized but it remains quite tense”.

In the automotive sector, it’s the same thing: for the CEO of Daimler, Ola Källenius, the shortage of semiconductors is one of the three main challenges of the market today. Confinements in China also tend to annoy the manufacturer. It has been Daimler’s largest market for several years. New Volvo Cars boss Jim Rowan also said his company did not currently have a sufficient quantity of semiconductors. He added that the company will still be affected by the shortage in the second quarter, but believes that it has done everything to “secure supply”.

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