Apple supplier Sharp reportedly building a plant in Vietnam due to the US trade war with China

Apple’s supplier Sharp is reportedly gearing up to move part of its production out of China in response to President Trump’s latest escalation of the growing US trade war with China.

Reuters reported Friday that Sharp’s new Vietnamese manufacturing facility will churn out LCD screens, presumably for Apple, starting in April next year.

Sharp joins a growing number of global firms looking to reduce production in China and move to low-cost countries to diversify manufacturing sites amid the escalating trade dispute.

Sharp currently supplies the LCD panels for iPhone XR.

Operating a plant in Vietnam will enable Sharp to shift part of its production from China “if requested by customers”. Trump’s threat to impose further tariffs on Chinese imports prompted some major companies to consider moving parts of their production out of China.

The additional tranche of U.S. tariffs could cause more pain for Sharp, which already suffered a bigger-than-expected 41% drop in quarterly profit as tit-for-tat import tariffs dampened sales of its smartphone components.

Japanese news outlet Nikkei said in mid-June that Tim Cook & Co. were considering moving about one-third of Apple’s total production out of China. The Wall Street Journal followed up with its own story claiming the new “cheese grater” Mac Pro model will be assembled in China rather than in Texas, like the previous “trashcan” version.

Less than a month later, Bloomberg piggy-backed on the story by claiming Apple had asked the Trump administration to exclude the new machine and accessories such as Magic Mouse and Magic Trackpad from the 25 percent tariff on Chinese imports.

We don’t know whether or not those reports could be trusted but Trump shortly after acknowledged that the Cupertino tech giant won’t be exempt from any new tariffs. “Apple will not be given tariff wavers, or relief, for Mac Pro parts that are made in China,” he tweeted. “Make them in the USA, no tariffs!”, reads one of the tweets from US President Donald Trump.

In a strange twist, Tim Cook told investors on a conference call this week that his company indeed wants to keep making the new Mac Pro in the US.

I know there’s been a lot of speculation around the topic of different moves and so forth. I wouldn’t put a lot of stock into those if I were you. The way that I view this is the vast majority of our products are kind of made everywhere. There is a significant level of content in the US and a lot from Japan to Korea to China, and the European Union also contributes a fair amount.

As he put it, that’s the nature of a global supply chain.

Largely I think that will carry the day in the future as well. In terms of the exclusions, we’ve been making the new Mac Pro in the US and we want to continue doing that.

He went on to add that the company is making necessary changes to make that dream a reality, including necessary investments and working on capacity.

We are working and investing currently in capacity to do so because we want to continue to be here. And so that’s what’s behind the exclusions. And so, we’re explaining that and hope for a positive outcome.

Nikkei reported two weeks ago that Apple was trialing AirPods production in Vietnam. And back in May, Taiwanese trade publication DigiTimes, citing an Indonesian-language story from DetikInet, reported that Apple’s second-largest contract manufacturer Pegatron was prepping to assemble some of the MacBook and iPad devices in a plant in Indonesia.