Apple key production partner Pegatron may move some production out of China in June

iPhone XS Max

As the trade war between China and the United States escalates, Pegatron, one of Apple’s biggest production partners, may move its production of some Apple products to Indonesia in June, according to multiple sources.

An Indonesian-language report from Detikinet claims Pegatron invested $300 million USD (about $403 million CAD) at an unnamed Indonesian factory in Batam, Indonesia.

The investment coincides with the recently formed partnership between Pegatron and PT Sat Nusapersada, an Indonesian manufacturing company getting subcontracted assembly duty. Pegatron’s latest move confirms an earlier report by AppleInsider that the company planned to relocate at least some of its manufacturing work outside China.

Abidin Hasibuan, CEO of PT Sat Nusapersada, said the products the company manufactures are from a U.S. brand, and they are for the U.S. market. Hasibuan, however, he did not disclose the name of the brand.

Detikinet also says Pegatron picked Indonesia over Vietnam for better labor efficiency.

As tensions between the U.S. and China continues to balloon, a new wave of hefty tariffs will likely diminish Apple’s earnings significantly, says Goldman Sachs, since most of the company’s products are manufactured in China.

Pegatron is not unique in its decision to move production outside the heat zone. Foxconn, another Apple’s key assembly partner, confirmed it will mass-produce iPhones, such as the three years old iPhone 6s, in India.

Source: Detikinet  via: Apple Insider