Apple is de-risking supply chains by seeking multiple sources for components and factories in different locations, according to an analyst.
Apple is reportedly set to sign a contract with China-based Luxshare to produce iPhones following trouble with its primary supplier Foxconn in Taiwan.
Foxconn suffered from disruption in October last year following the imposition of Covid restrictions on around 300,000 workers living at the Zhengzhou factory campus.
In November, the unrest erupted into violent protests, clashes with police, and attempts to climb fences to exit the facility.
Analysts have estimated that the disruption caused by worker protests cost Apple $1bn a week in lost sales.
Eddie Han, senior analyst at Isaiah Research, told Supply Management Apple was looking to reduce the risk it faced from too much supplier concentration.
“They would like to have two or more sources on each component or value chain,” he said. “Each company has been asked to have two or more factories in different places.”
China lifted Covid measures in December but concerns were expressed supply chain disruption would continue into January.
Han said falling demand had reduced pressure on tech supply chains, while the lifting of restrictions would “speed up the return to normalisation of supply chain operations”.
He said: “So even though utilisation rate is lower and some logistics issues have happened, it doesn't seem to be a big deal. And we believe it will get back to normal by the end of the first quarter.”
Apple has taken steps to diversify its supply chains away from China and into Vietnam and India after Covid lockdowns stalled production. Apple was set to shift 5% of global iPhone 14 production to India by late 2022 and it is expecting to produce 25% of all iPhones in India by 2025.
Han commented: “Balancing the proportion of suppliers and regions is what Apple is doing. Cultivating competitive second suppliers is good for cost. Decentralised production sites help reduce risk.”