News Briefing
　　As reported by "Nikkei Asia" on June 1, factories were shut down due to a citywide lockdown in line with mainland China’s epidemic prevention policy. As a result, Apple has decided to transfer some of its iPad production lines to Vietnam in order to avoid future component shortages and supply chain interruptions.

Impact Analysis
　　Aside from the iPad, Apple has also started producing the iPhone 13 in India and Brazil, where Foxconn works as the assembly partner. In the past, this product would be produced at the Zhengzhou plant in Henan, mainland China. The chairman of Foxconn indicated that Foxconn will continue to build a local supply chain in India, as the impact of the pandemic has expanded, making short-chain production the trend. This has highlighted the impact of China’s dynamic zero-Covid and shut-down policy on Apple's supply chain, forcing it to actively expand its production capacity outside of China.

　　The country that has benefited the most from this trend of moving supply chains, is Vietnam. In fact, in March 2022, exports from Vietnam reached US$34.71 billion, an increase of 48.2% as compared with that of February in the same year. In April, it also retained an export level of US$30 billion, while electronic products are considered to be the largest export category. Nonetheless, exports from Shenzhen in March were about US$18 billion, which has dropped by 14% year-on-year, as Shenzhen was going through another lockdown at this point in time. Since Vietnam and Shenzhen are close in geographical proximity and both of their main strengths are electronic products, the rise in exports from these two localities highlight the impact of China's continual lockdowns and pandemic control policies on supply chains. This has forced businesses to accelerate shifting their production to overseas manufacturers. At present, Taiwanese PCB companies are still relying on mainland China as their primary production base, which accounts for about 60% of the output value, whereas the proportion of production in Southeast Asia comes to only about 2%, not nearly as aggressive as that of Japan and South Korea. Although mainland China is still considered to be the “world’s factory” in terms of its vast market share, well-developed production infrastructure and well-trained labor, many companies have already considered diversification in order to reduce potential supply chain interruptions. Risk factors such as the “zero-Covid” policy, “dual control of energy consumption” and even the friction between China and the US should all be important considerations for diversifying the supply chain.