Despite tensions between the U.S. and China, Apple increased the number of suppliers located in mainland China
Apple adds more suppliers to its supply chain that are based in mainland China
The ability of China to add more suppliers to Apple than the U.S. and Taiwan combined is a sign of China’s domination in high-tech supply chains. The country’s ability to bounce back from COVID-19 has been a major reason for this. For example, Foxconn’s factory in Zhengzhou has been so busy assembling iPhone units, it has offered cash bonuses to new workers while Foxconn’s iPhone plant in India has cut production in half due to the virus.
Will Wong, an analyst for IDC based in Singapore, says that “China’s mature manufacturing industry still has its attractiveness despite the US-China tensions. Nevertheless, it doesn’t mean Apple will stay away from diversifying its supply chain and production. This is especially true given that the political tensions and supply chain disruptions caused by the pandemic have taught industry players not to put all their eggs in one basket.”
Apple still needs to come up with a Plan “B”
While Apple still continues to rely on Chinese companies for supplies, the tech giant’s CEO, Tim Cook, has made several visits to the mainland looking to build upon the relationships that Apple enjoys with suppliers located there. The 200 companies named on Apple’s 2020 supplier list receive 98% of what the firm spends on materials, manufacturing and assembly of products worldwide. 80% of these firms have at least one production site located in mainland China.
Apple still needs to come up with a solid plan “B” as the pandemic has proven that no matter how solid a company’s supply chain might seem, events beyond the control of the supplier could prove to be problematic. And even with the Biden administration in power since January in the states, the animosity between the two powers remains. Note that there has not been any effort made by those currently running the show to take Huawei off of the entity list or allow foundries using American tech to once again ship chips to Huawei.
