Apple Products Now Made In China, Other Countries Ousted
Apple who is urging employees to return to the office by September, has quietly during the COVID-19 pandemic been cuddling up to China, with Chinese Companies benefiting from the US Companies manufacturing programs at the expense of Taiwanese and manufacturers in other Countries.
Apple now has more suppliers in China than any other country, which observers claim is a sign that the US Governments attempts to untangle U.S. and Chinese supply chains has had little impact on the world’s most valuable tech company.
According to Nikkei Asia of the 200 global suppliers 51 were based in China this is up from 42 in 2018.
A review of Apple’s supplier list reveals that Taiwanese manufacturers have been pushed down the list.
Former U.S. President Donald Trump had hoped to reduce the USA’s reliance on China’s supply chain by imposing punitive tariffs and blacklisting many Chinese companies.
So far, Apple has cut ties with only one Chinese supplier, O-Film Technology, after Washington blacklisted the touch and camera module maker over alleged human rights abuses involving China’s Uyghur Muslim minority, also banned was a Company that manufacture ChiQ and Changhong appliances currently being sold in Australia.
The Apple Supplier List covers 98% of the company’s spending on materials, manufacturing, and assembly for the preceding fiscal year.
The report serves as a barometer of Apple’s reliance on suppliers from different parts of the world. The report has been released almost every year since 2013.
One Apple supply chain manager told Nikkei Asia that Chinese suppliers win orders by offering very low prices to Apple that non-China suppliers find hard to match, the manager said.
“They are willing to take low-margin businesses that other suppliers are reluctant to pick up. This way, they could gradually level up by working with Apple and can later bid for more business the next time.”
Getting into Apple’s supply chain, the manager added, is a “golden ticket” for suppliers to become the best in the world.
Apple is also cuddling up to Chinese owned businesses in other Countries.
The number of Apple suppliers in Vietnam grew to 21 last year from 14 in 2018 are large percentage of these businesses are owned by Chinese- or Hong Kong-based companies.
These include AirPods assemblers Luxshare Precision Industry and GoerTek, which both have been producing the wireless earbuds in Vietnam since early 2020.
The rise of Apple’s Chinese suppliers 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 are up against Luxshare and Cowell in camera modules.
Taiwan — which held the top spot on the list for more than a decade — is also losing ground. Its 48 Apple suppliers in 2020 made the island the second-largest group after China and Hong Kong, but that represents a drop from 52 suppliers in 2017. The number was 47 in 2018.
Following the acquisition of an iPhone assembly plant from Wistron last year, Luxshare now also controls Pegatron’s iPhone and MacBook metal frame and casing subsidiary Casetek Holdings, while Inventec, the earliest AirPods assembler, has lost a significant share in the business to Luxshare and GoerTek. Luxshare has also gained in Apple Watch assembly after Quanta Computer decided to drop out of the business last year.
The number of Apple’s U.S.-based suppliers has dropped as well, to 32 last year from 37 in 2017.
Analysts claim that Chinese suppliers’ willingness to shift production to countries like Vietnam and India reflected issues with China’s own investment environment.
Labor costs are rising, and it is getting harder to recruit enough production line workers during peak seasons every year, they said.
It also allows Chinese Companies to stamp products as made in Vietnam or Made In India.