Apple Inc.’s (NASDAQ:AAPL) dependence on China has not decreased despite tapping factories in Indian and Brazil, according to the company’s data. This has raised stakes for the company as the US continues its trade war with China following a promise from Trump for more tariffs.
China still important to Apple
The iPhone maker faces 15% in tariffs that the Trump administration imposed on products made in China, such as wireless headphones and smartwatches. These tariffs will start working as from September 1 while those on the iPhone will take effect fro0m December 15.
Apple is one of the American companies that are tightly bound to China. Several contract factories in China owned by Pegatron, Hon Hai Precision Industry’s Foxconn and Wistron, among others, are vital in the assembly of Apple devices. Recently the company has been expanding to other countries and has seen its contract manufacturers set production in these countries.
Apple expanding operations to other markets
For instance, in 2015, India did not have any Apple contract manufacturer facility, but currently, there are around three assembly locations. The facilities include a Foxconn owned factory that is planning to produce models from the iPhone X family devices.
Apple is tapping the Indian operations as it seeks to avoid strict import levies on iPhone. India has much market potential for iPhones, considering it is one of the last growing phone markets in the world. Foxconn and Apple have adopted a similar model in Brazil by opening a production facility.
Despite its expansion of opening more manufacturing facilities away from China, they are still not enough. The factories are smaller, and in the case of Brazil and India, they are only used to meet local demand. The contract factories in China have also been expanding, and they have added more facilities than those outside. For instance, Foxconn has added more locations from 15 in 2015 to the present 29 while Pegatron has also grown its locations to 12 from eight. The addition of factories is a result of the company adding smart speakers, watches as well as wireless headphones to its product portfolio.