Apple invests in Saudi Arabia for logistical hub

A huge number of iPhone 12 devices shipped by plane

In a supply chain story that seems to have flown just a little under the radar, it appears Apple has become one of the first investors in a new logistics zone in Riyadh, Saudi Arabia.

Apple gets into MENA, deal reached in 2018, maybe

If this feels a little far from home, Apple’s reasons to invest in the zone seem to be to create a regional distribution system there, according to a local report. (Don’t neglect recent discussions to open manufacturing there).

The hub is located at King Khalid International Airport and offers big global tax breaks and other inducements as the nation attempts to secure their business.

Saudi Minister for Transport and Logistics, Saleh Al-Jasser, explained Apple’s investment as follows: “Apple will set up a regional distribution center in the zone, as part of its plans to establish an assembly line, along with maintenance services and light manufacturing going forward.”

The minister said that the agreement with Apple was concluded when Crown Prince Mohammed bin Salman visited California in 2018 and met Apple’s CEO Tim Cook.

HRH Crown Prince Mohammed Bin Salman visited the headquarters of @apple with CEO @tim_cook where he explored potential areas for partnerships and cooperation in the areas of tech, education, research and training. #CrownPrinceInSF pic.twitter.com/13lB8fSTjn

— Saudi Embassy USA (@SaudiEmbassyUSA) April 7, 2018

Embrace and extend

This makes sense of course as the company continues both to expand its position in emerging markets while also migrating manufacturing to new locations, such as India and Vietnam.

It also makes sense to see Saudi Arabia as some form of MENA transportation and logistics hub as the company continues that work.

“This zone itself is unique. It encompasses best-in-class elements, enabling an optimal logistics and supply chain and environment. The integrated element of the zone means that all stakeholders, their systems, and transactions speak to each other in a seamless and transparent way,” Apple’s VP operations for Europe, the Middle East, India, and Africa Cathy Kearny said, as reported by Arab News.

In the background

The country is attempting to position its new logistics zone as a place to connect three continents. It said the strategically located integrated special logistics zone will serve billions of potential customers in easy reach in Africa, Asia and Europe and help to significantly increase Saudi’s cargo capacity to more than 4.5 million tons per annum.

It’s all part of the national attempt to diversify away from being a primarily fossil fuel based economy.

For Apple, it’s yet another symbolic representation of how the company is attempting to protect its international business against a continued set of fractures in the global supply chain and economy. In related news, we recently learned India’s Tata intends to add another 45,000 employees to its iPhone components factory.

And, in a series of recent Tweets, analyst Ming-Chi Kuo claimed Apple intends to diversify manufacturing outside China within the next three to five years. It seems pretty clear that a regional logistics hub, such as this one in Saudi Arabia, could help support such a plan.

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