Apple’s Chinese suppliers are looking for a way out
There’s a lot to look at in here
Apple’s Chinese suppliers are intensifying attempts to set up shop outside China as relationships between the superpowers continue to decline. Now one of Apple’s AirPods makers has hinted at the extent of this race.
‘Are you ready to leave China yet?’
We know Apple and its supply chain have been accelerating their investments in new supply chain locations in Vietnam, Thailand, Mexico, India and elsewhere. We think we know that Apple really wants to put a more resilient multi-state chain in place, as it learns from the grim lessons of COVID, war and the fast asphyxiating neoliberal consensus around global trade.
Today we hear from Apple AirPods maker, GoerTek, whose deputy chairman, Kazuyoshi Yoshinaga, explained, “Starting from last month, so many people from the client side are visiting us almost every day.”
He cited this as part of the company’s rationale to set up AirPods making factories in Vietnam as declining US/China relations sour the electronics industry component supply chain. Yoshinaga also stressed that most Chinese suppliers are seeking the way to achieve this as they face pressure from their big brand international clients.
While he didn’t name Apple, he did say that he thinks around 90% of companies seek to setup outside China, with India a particular client-side favorite.
The challenges are not easy to solve
Unfortunately, the manufacturer partners setting up shop outside China are encountering multiple layers of challenge. We recently noted the cultural challenge of doing business in new territories, but this reveals itself in numerous ways.
Take Foxlink, for example. That company makes charging cables for iPhones and its factory in India’s Andhra Pradesh caught fire Monday. Since then, we’ve learned safety equipment there was not functional, which is how come the conflagration became so serious.
Smoke detectors didn’t activate, fire alarms failed and Foxlink lost four of a total of ten India-based assembly lines as a result. The company shipped millions of iPhone cables made in India last year. This incident has cost the company millions of dollars and once again threatens the Apple supply chain.
We saw another incident in India last year when an iPhone factory was closed for an extended length of time once food preparation problems for staff were identified.
A recent FT report also noted some of the cultural and other differences Apple and its supply chain are grappling with are they attempt to build efficient supply chains – few seem able to match the experience in China.
However, Apple will be hoping that at some point its efforts generate the kind of critical mass it requires to improve this situation. Meanwhile it is attempting to migrate its supply chain one production line at a time.
Please follow me on Mastodon, or join me in the AppleHolic’s bar & grill and Apple Discussions groups on MeWe.
