Apple products now made in China, other countries ousted
Apple, which urges employees to return to the office by September, has quietly hugged China during the COVID-19 pandemic, with Chinese companies benefiting from the manufacturing programs of US companies at the expense of Taiwanese manufacturers and other countries.
Apple now has more suppliers in China than in any other country, which observers say is a sign that the U.S. government’s attempts to disentangle U.S. and Chinese supply chains have had little impact on the company. most valuable technology in the world.
According to Nikkei Asia, of the 200 global suppliers, 51 were based in China, up from 42 in 2018.
A review of Apple’s supplier list reveals that Taiwanese manufacturers have been pushed to the bottom of the list.
Former US President Donald Trump had hoped to reduce America’s dependence on the Chinese supply chain by imposing punitive tariffs and blacklisting many Chinese companies.
Apple has so far severed ties with only one Chinese supplier, O-Film Technology, after Washington blacklisted the touch module and camera maker for alleged human rights violations involving the Muslim minority. Uyghur from China, also banned a company that currently manufactures ChiQ and Changhong devices. sold in Australia.
Apple’s supplier list covers 98% of the company’s spending on materials, manufacturing, and assembly for the previous year.
The report serves as a barometer of Apple’s dependence on suppliers from different parts of the world. The report has been published almost every year since 2013.
An Apple supply chain official told Nikkei Asia that Chinese suppliers are winning orders by offering Apple very low prices that non-Chinese suppliers struggle to match, the official said.
“They’re willing to take on low-margin businesses that other vendors are reluctant to take over. That way, they could gradually level up in working with Apple and can later bid on more business next time around.
Entering Apple’s supply chain, added the director, is a “golden ticket” for suppliers to become the best in the world.
Apple also hugs Chinese-owned businesses in other countries.
The number of Apple suppliers in Vietnam rose to 21 last year from 14 in 2018. A large percentage of these companies are owned by companies based in China or Hong Kong.
These include AirPods assemblers Luxshare Precision Industry and GoerTek, both of which have been producing the wireless headphones in Vietnam since early 2020.
The rise of Chinese suppliers to Apple has come at the expense of its other suppliers.
The number of Japanese suppliers has fallen to 34, from 43 in 2017 and 38 in 2018. Japan Display and Sharp, which remain on the list, face competition from Chinese display makers BOE Technology Group and Tianma Microelectronics, while Sharp and Kantatsu confront Luxshare. and Cowell in camera modules.
Taiwan, which held the top spot for more than a decade, is also losing ground. Its 48 Apple suppliers in 2020 made the island the second largest after China and Hong Kong, but this is down from 52 suppliers in 2017. The number was 47 in 2018.
Following the acquisition of an iPhone assembly plant in Wistron last year, Luxshare now also controls Casetek Holdings, a subsidiary of Pegatron for frames and metal cases for iPhone and MacBook, while Inventec, the first AirPods assembler, lost a significant portion of the business to Luxshare and GoerTek. Luxshare also gained in Apple Watch assembly after Quanta Computer decided to pull out of the business last year.
The number of US-based Apple suppliers also declined, dropping to 32 last year from 37 in 2017.
Analysts say the willingness of Chinese suppliers to shift production to countries like Vietnam and India reflected problems with China’s own investment environment.
Labor costs are rising and it is becoming increasingly difficult to recruit enough workers to production lines each year during peak seasons, they said.
It also allows Chinese companies to stamp products as made in Vietnam or made in India.
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