In 5 years, Apple's supply chain fell from 44% Chinese to 36%

From Josh Horowitz' "Analysis: Apple supply chain data shows receding exposure to China as risks mount" posted Wednesday by Reuters:

A Reuters analysis of Apple's supply chain data shows China's prominence in the company's global manufacturing is declining: In the five years to 2019, China was the primary location of 44% to 47% of its suppliers' production sites, but that fell to 41% in 2020, and 36% in 2021.

The data shows how a diversification drive by Apple and its suppliers, with investments in India and Vietnam and increased procurement from Taiwan, the United States and elsewhere, is reshaping the global supply structure, although analysts and academics say it will remain heavily exposed to China for many years to come...

"The China supply chain is not going to evaporate overnight," said Eli Friedman, an associate professor at Cornell University who studies labour in China.

"Decoupling is just not realistic for these companies for the time being," he said, although he expected diversification to accelerate.

My take: It's a like big ship. Takes time to turn it around.

5 Comments

  1. Jonny T said:
    Shame no journalists had bothered to notice the tanker had been turning for years. They have all behaved like Apple has with recent events yet to even plan for it.

    3
    November 30, 2022
  2. Fred Stein said:
    And throughout the aforementioned time, Apple has also diversified it’s customer base to more geographies.

    And Tim Cook has boasted about this for years.

    And NO ONE pays any attention. Rather, they complain that Apple events are formulaic, predictable and incremental.

    2
    November 30, 2022
  3. Jerry Doyle said:
    “….. My take: It’s a like big ship. Takes time to turn it around.”

    Apple will continue assertively to diversify its supply chain dependence away from China. I do not believe, though, Apple will reduce much its operational footprint in China. Apple’s footprint globally will just grow and become more redundant.

    Tim Cook has worked arduously to cultivate strong ties with the PRC so as to retain the company’s connection and access to the China’s consumer market. Cook has refined his investment in China through political ties, labor connections, philanthropic networking and multiple investments. It is myopic to believe Apple plans to uproot significantly from its China commitment and its almost unfettered access to the burgeoning Chinese consumer. Such an attempt at extricating would be problematic to the CCP. So, I see Apple’s footprint in China continuing at a compelling presence with an enhanced redundancy in Apple’s global supply chain evolving mostly in other East Asian countries.

    In summary, it is not a matter of turning this big ship around. The big ship will continue its Chinese harborage. Instead, I see it as a matter of building new ships in other dockyards.

    3
    November 30, 2022
    • Bart Yee said:
      @Jerry Agree with your comments. Apple has been expanding its partner manufacturing sites in Vietnam, Taiwan, India, and now Arizona. Apple has also created additional second or third sourcing for parts, assemblies, and labor plus geographic options through partnerships and competitive sourcing. While much of Apple’s China parts supply chain is focused on support of China Foxconn assembly, Apple is likely to push for either short term export of parts to other assembly sites or ask parts suppliers to duplicate local to the above non-China sites.

      In time, these sites will become robust supply chains of their own, particularly as the India market expands. I expect we’ll see 5-10% of total revenue from India within 5-7 years if not sooner.

      I’d love to see India moved from Euro to either Rest of Asia or it’s own geosegment once it reaches $20B annual revenue.

      0
      December 1, 2022
  4. Neal Guttenberg said:
    All good points by Jonny, Fred and Jerry. All upvoted. Apple is easy to criticize for people who don’t follow things too closely. Sometimes the criticism is warranted, but mostly, these days, it seems that it is just for the clicks.

    1
    November 30, 2022

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