As the trade war between the U.S. and China worsens, and sanctions against Huawei get thrown into the mix, Apple and its supplier Pegatron are beginning to hedge their bets by relocating more of the company’s supply chain to places outside of China. A local report by Digitimes suggests that Indonesia has been chosen over Vietnam thanks to a better worker supply.
It seems like Pegatron is all prepared for assembling MacBooks and iPads in Batam, Indonesia, with production slated to start next month. The work will be subcontracted by Pegatron to PT Sat Nusapersada, a local manufacturer in Batam, and although the company’s CEO stopped short of naming the clients it would be working for, there’s a high chance Apple is in that list.
Pegatron is investing $300 million in Indonesian factories to achieve this, and they seem quite confident. PT Sat Nusapersada’s CEO claims that Indonesian productivity is superior to China’s, with a comparatively small 2% turnover rate. Apple’s contract manufacturers have indeed experienced volatility in their labor forces, though these have been attributed as much to wage and quality of life issues as major swings in product demand.
Pegatron is not the only key Apple supplier looking to assemble products outside China: Foxconn has confirmed its own plans to begin mass-production of iPhones in India later this year. Given the massive escalation in that war by the Trump administration earlier this month, this move only makes sense in the grand scheme of things. The escalations are hard on everyone, and we hope to see some form of resolution soon.
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