Finally and somewhat belatedly, Apple appears to recognize the inherent geopolitical risks of its China-centric supply chain and has been slowly shifting its production out of China.
Gene Munster and Rebecca Mulberg for Loup Funds:
To gauge the speed of such diversification efforts, we reviewed the 2021 Supplier List (released in October 2021) which captures 98% of the company’s direct spend for manufacturing and products. We estimate that, in 2021, between 52-55% of Apple’s overall revenue was made in China, down from 60-62% in 2020. We expect that number will show a decline into the 45-50% range in 2022. Notably, of the 150 new manufacturing locations added in 2021, 79% are reportedly based outside of mainland China. This includes expansion within the United States (24), Taiwan (16), Singapore (9), Vietnam (8), Malaysia (8) and South Korea (7). While these appear to be modest supply chain shifts, we view this as a quick pace given the sheer size of revenue that comes from China-based manufacturing: ~$160B in FY21.
We believe the company is entering a transition of reducing its reliance on China that may take as long as a decade to achieve.
MacDailyNews Note: Loup offers a list of Apple supplier locations by country and more data in the full article here.
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