William Gallagher
Despite its well-publicized moves to cut its dependence on China as its main supplier, Apple has also been increasing the number of firms it works with for production with in the region.
By January 2024, Apple's supply chain had spent $16 billion in moving away from China, and as of April 2024, 14% of all iPhones are being manufactured in India. But according to an analysis by Nikkei Asia of Apple's public reporting, the company is continuing to deepen its relationships with China.
"Chinese suppliers have formed the largest camp of Apple suppliers since 2020, and their number increased to 52 last year from 48 in 2022," write Cheng Ting-Fang and Lauly Li. "The number of manufacturing or development facilities in China — including those owned by domestic and foreign companies — grew by 10 to 286."
At the same time, Apple reportedly used fewer suppliers from Taiwan, the US, Japan, and South Korea. Countering that, suppliers in Vietnam rose 40% to 35 during 2023, while Thailand grew around 33% to 24.
Yet the publication claims that approximately 37% of Apple suppliers in Vietnam are from China and Hong Kong. That includes Luxshare, which builds AirPods, and iPad assembler BYD.
Nikkei Asia says that the number of suppliers in India stayed on 14 in 2023. However, that 14 now includes that Tata Group, which has been buying iPhone manufacturing facilities in the country.
Apple is committed to expanding its production in India, and Tim Cook has also said that the company is looking to strengthen its commitments to Vietnam. Cook said this during a trip around South Asia, where he also said Apple would look at investing in Indonesia, and has now spent $250 million in expanding an AI campus in Singapore.
At the same time, Apple has increased its R&D facilities in China with two lab expansions. Cook also said in March 2024 that China remains critical to Apple.
It's unlikely that Apple could ever entirely leave China, even if it should want to. In the meantime, the company appears to be juggling both political and logistical pressures, as US/China trade tensions continue, but also Chinese issues of power supplies and COVID measures have affected production.
Then while Nikkei Asia's reporting is entirely based on Apple's public filings. Those filings are annual — and they were different when covering 2022 instead of the latest 2023. Over the year 2022, Apple cut eight suppliers in China, while then adding only five new ones.
It was also in 2022 that Apple increased its Indian supply firms to 14, having been on 11 for 2021.
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5 Comments
If the China-Taiwan cold war goes hot, Apple had better be ready to operate without China. Their only other option will be to shut down.