As China is increasing its tariff rate in its country, brands such as Apple are starting to move out its assembly plant outside of China. Apple’s primary target would be the South East Asia countries. Surprisingly, Malaysia has been named its potential location for its new factory.
According to Nikkei Asia Review, Apple wants to reduce its production capacity in China between 15 and 30% to avoid being the victim of the trade war between China and the US. Other than Malaysia, Apple also has the plan to locate its assembly plants to Indonesia and Vietnam. Apple has already started to assemble the iPhone XR in India. Last month May, detikINET says Apple could possibly manufacture MacBook and iPad in Indonesia.
Statement from Nikkei Asia:
At the end of last year, the company began to expand its so-called capital expense studies team, according to sources familiar with the matter. The team of more than 30 people is discussing production plans with suppliers and governments over financial incentives they might be willing to offer to attract Apple manufacturing, as well as regulations and the local business environments,
How Apple assembly partners will react to this?
Other than that, from Nikkei’s report, Apple has asked its assembling partners to consider its assembly plants outside of China. For now, there are many assemblers such as Foxconn, Pegatron, including other major MacBook makers such as Quanta Computer. As for now, it could take up to 18 months for the whole productions to resume after relocating outside of China. The reason behind this delay will be due to the logistics issues.
From this trade war, one of the country who benefits is Malaysia. According to Malaysia’s Finance Minister Lim Guan Eng, during the trade war between the US and China, Malaysia’s investment increases to 73.4%. The Minister also says most of the investment comes from the United States where RM11.5 billion and RM4.4 billion comes from China.
In conclusion, can we expect the iPhone price to drop in Malaysia if Apple locates its assembly factory to Malaysia? We have to wait until we receive final confirmation from Apple.