The billionaire founder of Apple’s largest supplier has asked the US company to move part of its sprawling production chain from China to neighbouring Taiwan.
“I am urging Apple to move to Taiwan,” said Terry Gou, the largest shareholder in Hon Hai Precision Industry, answering a question about whether Apple will shift production away from China; “I think it is very possible,” he said without elaborating.
The Trump administration’s threat to levy tariffs on some $300bn (€265bn) of Chinese-made goods — including phones and laptops — has inflamed speculation that Apple will divert some capacity away from the world’s second largest economy. Hon Hai is the largest of hundreds of Apple-suppliers with factories on the mainland, making most of the world’s iPhones from the central Chinese city of Zhengzhou.
A significant shift of manufacturing from China to Taiwan — which Beijing views as part of its territory — may also exacerbate tensions between the two governments. Hon Hai, the main listed arm of the Foxconn Technology Group, is today the largest private employer in China, paying as many as a million, mostly migrant labourers, to put together everything from iPhones to HP laptops.
Mr Gou, who stepped down as Hon Hai chairman yesterday to focus on winning a party nomination to compete in the 2020 Taiwanese presidential elections, had run a company that depends on Apple for half its revenue.
It’s unclear how much capacity Mr Gou may have been referring to, nor how feasible a large-scale move —for Hon Hai or any other Apple supplier — may be.
The Taiwanese firms that assemble most of the world’s electronics are now expanding or exploring plants in south-east Asia and elsewhere to escape punitive tariffs on US-bound goods.
But, the vast majority of their capabilities remain rooted in China. The Nikkei reported this week that Apple asked its largest suppliers to consider the costs of shifting 15% to 30% of its output from China to south-east Asia, but three major partners to the US company later pushed back against that idea. Hon Hai, itself, has said Apple hasn’t requested such a move.
Earlier this week Apple said the proposed US tariffs on goods from China would reduce the company’s contributions to the US economy and hurt its global competitiveness levels.
Apple said the US should not move ahead with its tariffs proposal. Trade talks between the US and China are due to take place alongside next week’s G20 gathering in Japan.