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US-China Trade Dispute Triggering Production Exodus

Joyce Huang

   U.S. tech giant Apple has reportedly asked its major suppliers, mainly
   China-basedmanufacturers from Taiwan,to consider moving 15 to 30% of
   their production outside of China to avoid higher tariffs imposed on
   U.S.-bound exports.

   The production migration, which analysts say is already ongoing,will
   hurt the tech giant's profit margin, but also lead to massive job
   losses in China.

   They add that such shifts have also occurred over the past year among
   other China-based tech suppliers and the trend will continue if the
   trade war between the world's two biggest economies keeps escalating.

   "Over the past year, to my understanding, manufacturers in the
   information [technology] sector, for example, [China-based Taiwanese]
   suppliers of personal computers or consumer electronics have moved
   faster than handset makers and relocated [part of] their assembly lines
   outside China," says Sean Kao, senior research manager at IDC Taiwan
   onworldwide hardware assembly research.

   Caught in the Crossfire

   Tech companiessuch asApple are caught in the crossfire of U.S.-China
   trade frictions and face the threatof heavy punitive taxes on their
   China-made, U.S.-bound products.

   Earlier this month, U.S. President Trump said he would decide whether
   to slap Beijing with further tariffs on another US $300 billion worth
   of Chinese goodsafter he meets withChinese President Xi Jinping at G-20
   later this week.

   Citing anonymous sources, theNikkei Asian Reviewreported last week that
   Apple is planning on production shifts to avert the threat.According to
   the report, Applehas asked its major iPhone assemblers including
   Foxconn Technology, Pegatron and Wistron to evaluate the cost of moving
   their assembly lines, which manufacture U.S.-bound iPhones in China, to
   other southeastern Asian countries.

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