U.S. Apple Inc. wants to increase production outside of China because of Beijing’s overly harsh anti-commodity policies and disagreements between the PRC and the U.S., knowledgeable sources told The Wall Street Journal.

The company is primarily looking at India and Vietnam as countries where it could ramp up capacity at its existing non-large-scale production facilities there.

Currently, more than 90 percent of Apple’s products, including iPhone smartphones, iPad tablets and MacBook laptops, are made in China at factories of the company’s major suppliers. Apple sees its dependence on Chinese supplies as a threat amid China’s disagreements with the US and Beijing’s authoritarian policies, the sources said.

In addition, the tough coronavirus policy implemented by the Chinese authorities also worries the company because it risks underproduction. Recent lockdowns in Shanghai and other Chinese cities over the new COVID-19 outbreak have created supply chain gaps for many Western companies. Apple said in April that a new wave of coronavirus in the PRC could cost it about $8 billion in lost revenue in the current quarter.

Still, China remains the most attractive location for Apple for several reasons, including its trained labor force, low costs compared to the U.S., and an extensive supplier network that would take years to build in another country. Another undeniable advantage is that Apple can sell products made in China in the same country, which is simultaneously considered one of the largest markets for the company.

Meanwhile, India may prove to be the most successful alternative to China for Apple as its population is as large as in the PRC and costs are as low. Apple’s Taiwanese suppliers Foxconn Technology Group and Wistron Corp. – have already started organizing production in India, which is mainly for the domestic market. At the moment, Apple is in talks to expand production, which will also go to exports.

However, due to the fact that Apple’s major suppliers are mostly Chinese companies, it is difficult for them to do business in India amid political differences between Beijing and New Delhi. For this reason, Chinese suppliers are keen to attract Apple’s attention to manufacturing in Vietnam and other Southeast Asian countries.