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Apple's Dependence on China Is Rising? Foreign Media: China's Industrial Chain Is Irreplaceable

Source:Iris Liang Time:2019-9-2 9:33:45

Reference News Network reported on September 2 Foreign media said that US consumer electronics company Apple's supply chain data shows that the use of Brazilian and Indian factories did not reduce Apple's dependence on China.

Reuters reported on August 28 that from September 1st, the Trump administration will impose a 15% tariff on the main products made by Apple in China, including smart watches and wireless headphones, the most important product for Apple. The tariff collection will be implemented from December 15.

According to the report, few American companies have such close ties with China as Apple. Apple's important foundry - Taiwan's Hon Hai Precision Foxconn and other companies employ thousands of workers to assemble apple products.

In recent years, Apple's foundry manufacturers have expanded to other countries and regions. The factories outside China are small. In India and Brazil, Apple's products in these two factories are only used to meet local demand. At the same time, the number of Apple foundries in China is far more than that of China. According to Apple's data, only Foxconn's factory expanded from 19 in 2015 to 29 in 2019, and Heshuo expanded from 8 to 12. At the office. The foundry has set up these new plants as Apple has added product lines such as smart watches, smart speakers and wireless headphones.

According to the report, in addition to these foundries, the remaining Apple suppliers - chip, aluminum, connectors, circuit boards and other component manufacturers - are increasingly concentrated in China. The data shows that in 2015, the site of all its suppliers was 44.9% in China, and in 2019 it had risen to 47.6%. Since 1979, China has embarked on the road of "reform and opening up". After 40 years of development, both the spare parts industry and the labor supply are very mature and sufficient. This is why SEKO Machinery can provide a cost-effective stainless steel industrial welded pipe production line. Compared to some well-known international tube-making machine brands, our efficiency and quality will not be lost, but our prices can be several times less than them. China's Jiuli Group, Sanhua Group and other top companies are our old customers.

According to the report, Apple has encountered obstacles in seeking a diversified supply source outside of China. There are many suppliers in China that can make hundreds of millions of mobile phones per year, while maintaining only a few days of inventory. The free cash flow that investors value is critical.

The size of Apple also makes it impossible to easily transfer the industrial chain, because other countries basically do not have a large labor force like China. Factories need skilled engineers to design custom tools and processes and eliminate related failures.

According to the report, even if Apple can produce in India or Vietnam, the number of products is relatively small compared with the company's overall demand.

In addition to China, "There is no such infrastructure in the world that can make 600,000 mobile phones a day," said Dave Evans, CEO of Fictiv, a San Francisco-based supply chain company.

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