Tech war between US and China: Apple places China at the top of supplier list, ignoring decoupling talks and scrutiny of its suppliers

Apple has added more mainland Chinese suppliers than anywhere else to its supplier list in the past three years, defying deterioration US-China relations during the Trump administration, there was talk of economic decoupling and increased scrutiny of its component producers.

Almost a third of the newly shortlisted companies are from mainland China, according to a South China Morning Post analysis of Apple’s supplier list for 2017 and 2020. Of the 52 new names added to the latest list, 15 are from the mainland, several are based in the southern technology center of Shenzhen and others are from the eastern province of Jiangsu.

Suppliers from the United States and Taiwan rank second in number, each with seven new companies shortlisted.

Rising number of mainland companies approved as suppliers to Apple highlights China’s importance in high-tech global supply chains, especially after the country was able to contain the coronavirus and reopen its economy national.

the To post reported earlier that the Zhengzhou plant of Taiwan-based Foxconn Technology Group, Apple’s largest contract iPhone assembler with a workforce of 250,000, was offer cash rewards to attract new workers to cope with intense production. This contrasts sharply with Foxconn’s iPhone plant in India, which had to cut production by 50% due to Covid-19 infections among workers, Reuters reported last month.

“China’s mature manufacturing industry still has its appeal despite US-China tensions,” said Will Wong, Singapore-based analyst at research firm IDC.

“Still, that doesn’t mean Apple will stay away from diversifying its supply chain and production,” Wong said. “This is especially true given that political tensions and supply chain disruptions caused by the pandemic have taught industry players not to put all their eggs in one basket.”

The 200 companies on Apple’s 2020 supplier list account for 98% of the company’s direct spending on materials, manufacturing, and product assembly globally. Almost 80% of these suppliers have at least one production site in mainland China.

While the list does not provide the monetary value of third-party services, suppliers based in mainland China typically offer lower value-added manufacturing and materials, while products and services with higher profit margins – including semi – conductors and advanced components – are checked by US and Taiwanese suppliers. .

Foxconn, the Taiwanese company that is Apple's largest subcontractor iPhone assembler, employs a quarter of a million people.  Photo: Reuters

Apple still relies heavily on US vendors like industry conglomerate 3M, as well as chip companies Intel and Skyworks Solutions.

Mainland Chinese companies on Apple’s list include Shenzhen Everwin Precision Technology, a 20-year-old smart component manufacturer, Tianma Microelectronics Co, a liquid crystal display (LCD) manufacturer, flash memory company GigaDevice and Nanping Aluminum, a metals manufacturer in Fujian Province.

Given Apple’s reliance on China as a supply chain partner and important market for its products, the company’s chief executive, Tim Cook, has actively cultivated ties with government and business during his frequent visits to the continent.

Cook, for example, is chairman of the advisory board of Tsinghua University School of Economics and Management, a position that gives access to Chinese leaders, including Chinese leader Xi Jinping, a former Tsinghua student.

While getting on Apple’s supplier list is a sign of corporate competence and can generate a steady stream of revenue for years to come, the launch can be painful.

Ofilm Group, a Chinese manufacturer of optical and optoelectronic components, became a rising star in the industry after being named Apple’s supplier in 2017. However, after being added to Washington’s trade blacklist last year for allegedly using Uighur Muslims as forced labor, Apple abandoned him as a supplier, according to a Bloomberg report in March, citing a person familiar with the matter. Ofilm shares have since lost almost 50% of their value. – South China morning post

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About Joaquin Robertson

Joaquin Robertson

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