Apple is turning away from China and towards place like Vietnam, India, and elsewhere to diversify its supply chain, especially in assembly, after the Chinese Communist Party’s quixotic COVID-19 lockdowns in quest of the unattainable “zero COVID” pipe dream, among myriad other issues, threatened the company’s ability to manufacture products in a predictably, timely manner.
The mushrooming of factories in southern India marks a new chapter for the world’s biggest technology company. Apple’s extraordinarily successful past two decades—revenue up 70-fold, share price up 600-fold, a market value of $2.4trn—is partly the result of a big bet on China. Apple banked on China-based factories, which now churn out more than 90% of its products, and wooed Chinese consumers, who in some years contributed up to a quarter of Apple’s revenue. Yet economic and geopolitical shifts are forcing the company to begin a hurried decoupling. Its turn away from China marks a big shift for Apple, and is emblematic of an even bigger one for the world economy.
Apple’s packaging proclaims “Designed by Apple in California”, but its gadgets are assembled along a supply chain that stretches from Amazonas to Zhejiang. At the centre is China, where 150 of Apple’s biggest suppliers operate production facilities. Tim Cook, who was Apple’s head of operations before he became chief executive in 2011, pioneered the company’s approach to contract manufacturing. A regular visitor to China, Mr Cook has maintained good relations with the Chinese government, obeying its requirements to remove apps and to hold Chinese users’ data locally, where it is available to the authorities.
Now a change is under way. Mr Cook, who has not been seen in China since 2019, is wooing new partners. In May he entertained Vietnam’s prime minister, Pham Minh Chinh, at Apple’s futuristic Cupertino headquarters. Next year Apple is expected to open its first physical store in India (whose prime minister, Narendra Modi, is a fan of gold iPhones)…
The most pressing reason for the scramble is the need to spread operational risk.
MacDailyNews Take: Better late than never.
It’s smart for both Apple and Foxconn to diversify assembly outside of China. There’s no sense having all of your eggs in one basket. — MacDailyNews, April 2, 2019
Apple cannot divest their dependence on China quickly enough (because they started years too late). – MacDailyNews. August 17, 2022
Diversify, diversify, diversify – especially away from CCP-controlled China. – MacDailyNews, October 19, 2022
Former U.S. President Richard Nixon, who opened relations with China in the early 1970’s, just before his death in 1994 remarked on China: We may have created a Frankenstein.
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