""Tech News"" – Google News
Apple has added more mainland China suppliers to its supplier list than anywhere else in the past three years, defying deteriorating US-China relations during the Trump administration, talks about economic decoupling, and increasing scrutiny of its component manufacturers.
Nearly a third of the newly shortlisted companies are from mainland China, according to an analysis by the South China Morning Post of Apple’s supplier list for 2017 and 2020. Of the 52 new names added to the latest list, 15 are from the mainland, with several based in the southern Shenzhen Technology Center and others in eastern Jiangsu Province.
In second place are suppliers from the USA and Taiwan, each with seven new companies on the shortlist.
The rise in the number of mainland companies approved as Apple suppliers underscores China’s role in global high-tech supply chains, especially after the country managed to contain the coronavirus and reopen its domestic economy.
The Post previously reported that the Zhengzhou factory was offering cash rewards to Taiwanese Foxconn Technology Group, Apple’s largest supplier of iPhones with a quarter of a million employees, to attract new workers to busy manufacturing. This is in sharp contrast to Foxconn’s iPhone factory in India, which had to cut production by 50% because of Covid-19 infections among workers there, Reuters reported last month.
“China’s mature manufacturing industry is still attractive despite the tension between the US and China,” said Will Wong, a Singapore-based analyst with research firm IDC.
“Still, that doesn’t mean Apple will stay away from diversifying its supply chain and manufacturing,” said Wong. “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.”
The 200 companies on Apple’s 2020 supplier list account for 98% of the company’s direct spend on materials, manufacturing, and assembling products worldwide. Almost 80% of these suppliers have at least one production site in mainland China.
Although the list does not reflect the monetary value of third party services, mainland China-based suppliers generally offer lower value added manufacturing and materials, while higher margin products and services – including semiconductors and advanced components – from US and Taiwanese Suppliers are controlled.
Apple still relies heavily on US suppliers such as the industrial group 3M and the chip companies Intel and Skyworks Solutions.
Mainland Chinese companies on Apple’s list include Shenzhen Everwin Precision Technology, a 20-year-old smart component manufacturer, Tianma Microelectronics Co, a liquid crystal display (LCD) manufacturer, GigaDevice flash memory company, and Nanping Aluminum, a metal manufacturer in Fujian Province.
Given Apple’s reliance on China as both a supply chain partner and a key market for its products, the company’s CEO Tim Cook has been actively involved in government and business relationships during his frequent visits to the mainland.
For example, Cook is chairman of the advisory board of Tsinghua University School of Economics and Management, a position that gives access to Chinese leaders, including Chinese leader Xi Jinping, who is a Tsinghua alumnus.
While getting on Apple’s supplier list is a mark of business expertise and can be a steady source of income for years, getting started can be painful.
Ofilm Group, a Chinese manufacturer of optical and optoelectronic components, became a rising star in the industry after being named an Apple supplier in 2017. However, after it was blacklisted in Washington last year for allegedly using Uighur Muslims as slave labor, Apple dropped it as a supplier in March, citing someone familiar with the matter, according to a Bloomberg report. Ofilm’s shares have since lost nearly 50% of their value. – South China morning post