Yahoo Finance's Akiko Fujita and Brian Cheung discuss reports that Apple will look to expand its supply chain outside of China and how the stock is responding.

Video Transcript

BRIAN CHEUNG: Well, in the same vein, Apple has told suppliers that they want to expand production outside of China, this according to the "Wall Street Journal." And as it stands, over 90% of all Apple products are manufactured in China, but the report noting that the company could be looking to India and Vietnam as alternatives. And Akiko, again, as we were just kind of exploring with Josh a few seconds ago, it might be very much the case that other types of multinational companies will be trying to do the same, as this kind of big shift happens.

AKIKO FUJITA: Well, and the move out of China has been happening. It's been accelerated, really, during the Trump years, during the US-China trade war. But the news out of Apple is significant because of that very number you pointed to, right? 90% of their production or manufacturing happens in China. Vietnam certainly a big potential market that could benefit on the back of that because they already have the infrastructure in place, with companies like Samsung already being there as well.

But there's a number of factors that have really led to this. It's the trade war, it's COVID. It's now this shutdown, whether or not you know, in fact, your factories can continue to operate, and all of that has led to questions about whether, in fact, you should put all your eggs in one basket. A lot of companies would argue, well, we've been shifting away already, and this is only going to accelerate that.

BRIAN CHEUNG: And of course, I think that's-- actually, I think that's the best framing for all of this, right? Because, yes, certainly, the COVID aspect of things has underscored the grip that the Chinese Communist Party has on the entire economic switch of this whole country. But at the same time, there was already this debate happening about whether or not there was this secular trend of China shifting as a primarily manufacturing-based economy to something more of a consumption-based economy, where the wealth that was built inside of that country is actually leading them to turn to other countries as main exporters into China, as opposed to the vice versa, which was the big story of China over the previous decades.

AKIKO FUJITA: Well, and there's also the political risk that is looming in the back, which is--

BRIAN CHEUNG: There's a lot of it.

AKIKO FUJITA: Which is, what happens if China does move on Taiwan? We heard from President Biden overnight say that the US would, in fact, defend Taiwan. He walked that back a bit. But the reality is, after what happened between Russia and Ukraine, a lot of these companies are reassessing where they're based and where the risks are, and whether, in fact, they should plan for any potential conflict that could happen, even though that's not on the table right now.

BRIAN CHEUNG: And again, far from the move that Apple is going to completely leave China, not at all what the "Wall Street Journal" reporting. It's suggesting just merely that they want to diversify where they're producing. But we'll leave that there for right now.