Apple moves Mac Pro production to China from U.S.: Wall Street Journal


June 28, 2019 / 10:09 PM / Updated 4 hours ago

(Reuters) – Apple Inc (AAPL.O) is shifting manufacturing of its new Mac Pro desktop computer to China from the United States, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The move comes at a time when the Trump administration has threatened to impose new levies to cover nearly all imports from China and pressured Apple and other manufacturers to make their products in the United States if they want to avoid tariffs.

Last week, Apple asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to Southeast Asia, according to a Nikkei report.

“If true, suggests to me that Apple has tremendous confidence that the U.S. and China will be able to solve their trade dispute and do so in the near-future,” D.A. Davidson analyst Tom Forte said in an email.

China is a key market for Apple as well as a major production center for its devices. The company got nearly 18% of its total revenue from Greater China in the quarter ended March.

Apple’s Mac Pro, a $6,000 machine used by creative professionals, has been facing waning demand, the Journal said here

The company does not break out sales numbers for its Mac Pro machines. The desktop is part of the company’s Mac line of products, which accounted for less than 10% of Apple’s total sales in 2018. In 2018, Apple sold about 18 million Mac products, compared with about 218 million iPhones.

“Like all of our products, the new Mac Pro is designed and engineered in California and includes components from several countries including the United States,” an Apple spokesman said. “Final assembly is only one part of the manufacturing process.”

Apple’s decision coincides with the end of tax subsidies that it got for making the desktop in a plant in Texas run by contract manufacturer Flex Ltd, according to the Journal.

“(This) serves as a reminder that, relative to the U.S., manufacturing in China remains a lower-cost alternative and benefits from an existing infrastructure, versus having to, potentially, rebuild one in the U.S”, Forte said.

The tech giant has tapped contractor Quanta Computer Inc (2382.TW) to manufacture the computer and is ramping up production at a factory near Shanghai, the report said here

Quanta did not respond to a request for comment.

Apple’s shares were down marginally at $198.69.

Reporting by Akanksha Rana in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D’Silva

Source: Reuters “Apple moves Mac Pro production to China from U.S.: Wall Street Journal”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


8 Comments on “Apple moves Mac Pro production to China from U.S.: Wall Street Journal”

  1. Kwai Laan says:

    Trump is playing poker and is trying to bluff his way through. Xi is a weiqi player making strategic moves and he has Trump cornered. At the G20 meeting in Japan Trump has to accede to China’s demand to roll back the ban on Huawei.

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  2. komonsense says:

    from the daily beast, by gordon chang; 15hrs ago:TRUMP BOWS TO XI JINPING’S HUAWEI DEMANDS AT G20 OSAKA SUMMIT is the headline of the article, and its last sentence is “it looks like trump just surrendered to china”.

    one commenter posted; trump just got his clock cleaned by Xi”

    Like

  3. Joseph says:

    Apple is an American company with big American sales margins. But obviously China’s market is bigger and significant to make them to move production to China, obviously to avoid tariffs and American’s erratic policies.
    Xi Jinping is wise indeed to hit foreign companies with sanctions when their actions are against China’s national interest, eventhough they are acting in compliance with their home countries policies. As they are doing business in China, they should put China’s national interest paramount above all, including their own counties’ national interest, especially with the policies as absurd and belligerent as Trump’s. It is no less what is expected from Overseas Chinese doing business outside China. The American would expect any Chinese American business to abide to American policies even if those policies put them as serious disadvantages, no matter be it small business or large tech companies.
    China should implement harsh and zero tolerance policies to foreign companies from countries with agendas against China, like America. It is necessary to counter hostile foreign agendas. Let the companies outweigh the conflicting policies. Apple’s move may be a strategic move, but if the American government keep pushing, they may consider to move entire to China, to be a Chinese company. Who knows it will be the first of many to make such move. As a Chinese company, Apple would have bright future. In the place of dwindling American consumers, they will have huge Chinese markets, not to mention the loyalties of Overseas Chinese. And they may set up branch in the Moon when China establishes Moon colony.

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  4. Simon says:

    Trump officially declared he lost the trade war with China at the G20 summit In Japan. If you watch his press interview he looks like a man utterly defeated, there is no other way of looking at it. Right now Washington is just going through a face saving climbdown while rolling back sanctions on Chinese tech companies including Huawei while it could not get China to make a single concession. The damage has already been done against America’s economy, manufacturing moving out instead of going in, prices for goods has risen, China switching its imports away from America along with the rest of the world. America has capitulated thanks to an incompetant baffoon.

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    • komonsense says:

      an incompetent buffoon helps, but what was more decisive was china’s leadership

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      • Allen Lau says:

        Trump sounded hollow and contrived while the Chinese team appeared very competent.

        Live: Media briefings after the G20 Osaka Summit closing session

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    • Joseph says:

      When China approved the Osaka meeting, Lightizher was required to go to China, immediately, to work out the kowtowing details. That’s why the American keep silence about his visit’s details. Trump may throw some rhetorics about extra tariffs and all, but there’s only one thing he must do, kowtowing to Xi Jinping in Osaka. It was expected, for it was pre-arranged before the meeting.

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