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Apple increases reliance on Chinese suppliers

Credit: Foxconn

Last updated

Nearly one-third of the companies that Apple has added to its list of suppliers in the past three years are from mainland China, bucking talk of Apple reducing its reliance on the country.

Among the 52 new companies that Apple added to its supply chain since 2017, 15 are located in mainland China, the South China Morning Post reported Tuesday. Several of those companies are based in Shenzhen, while others are from Jiangsu.

Apple also added seven companies from the U.S. and seven companies from Taiwan to its supplier list between 2017 and 2020.

The prevalence of Chinese-based firms on the list underscores Apple's reliance on China, and the country's overall importance to the global technology supply chain during the coronavirus pandemic.

Foxconn, for example, began offering cash incentives in recent months to attract new workers amid the busy production season. In India, by contrast, Foxconn has had to cut production output by about 50% because of the COVID-19 situation there.

The number of Chinese suppliers added to Apple's shortlist also defies trade tensions between U.S. and China during the Trump administration and talks of economic decoupling amid increasing scrutiny of Chinese suppliers.

According to the South China Morning Post, the 200 companies on Apple's 2020 supplier list make up about 98% of the company's direct spend for materials, manufacturing, and assembly. About 80% of those suppliers have at least one facility in China.

Apple's reliance on China has come under scrutiny in recent years. Tech investor Peter Thiel back in April, for example, called Apple's relationship with China a "real problem." A group of U.S. lawmakers also urged Apple to exit China in May.

Apple has been accused of making a number of efforts to appease Beijing, including storing Chinese user data on locally owned servers and removing apps that run afoul of local regulations.

Additionally, there have been concerns about human rights abuses in China, specifically about allegations of companies using coerced labor. In May, a report indicated that at least seven Apple suppliers participated in labor programs suspected of oppressing minorities in China.

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