Apple’s supply chain is dancing, changing, growing

Apple-focused analyst Ming-Chi Kuo echoes recent claims Apple is working to diversify across its supply chain, including introducing more manufacturing in multiple nations; Foxconn is extending its iPhone factory production in India; and Intel has changed its mind about 3nm chips, which puts its supplier, TSMC, in a bind – and may impact Apple.

Three stories, each one consequential. Let’s take it from the end and move up.

Intel’s delayed 3nm dream

Apple chip supplier, TSMC, has been working toward production of 3nm chips for ages, but now it will scale back its overall plans. It will do so because Intel has postponed what is being described as a major order, which means TSMC loses a big client. This will force the company. Which we all know also supplies chips for Apple to slow down its planned expansion of 3nm chips.

Will this make a difference? We don’t know. I’d imagine there’s some big differences between the 3nm chips Intel wanted and those Apple has likely already booked. It also implies that Apple has a truly huge opportunity to reach 3nm across Macs, iPhones, and iPads years before anyone else. That’s an inflection point in my book. “ At the same time, Apple’s new 2024 iPhone is expected to fully adopt 3nm processors,” TrendForce states. Meanwhile, of course, Apple’s on track for a big bright Mac future.

Foxconn’s iPhone production extends in India

Foxconn already runs at least one iPhone production line in India. Products produced there benefit from government subsidy and are mainly sold in the nation. Now it plans to build an additional production line at its facility close to Chennai, according to Economic Times. Tht report claims:

• Sales in India are high, and across APAC (As we knew).
• Company is increasing hiring in the factory following a “food poisoning incident that angered workers”.
• (It was so serious the factory was shut for months. We need unions).
• Factory may be online in two months with c.8.000 employees. The new line may take longer.
• A new airport is expected to be constructed a half hour’s drive away.

[Also read: Apple Q3 FY 22 investor meeting transcript]

Kuo sees diversification

Finally, mystical Apple analyst Ming-Chi Kuo reckons Apple is working with additional Chinese suppliers and diversifying its chain beyond China, but explains this as part of handling an increasingly complex supply chain.

He points to two challenges:

• “Challenge 1: Impact of geopolitical risks on sales in China (Apple’s most important overseas market),” he wrote. “Solution: Do business with more Chinese suppliers.”
• “Challenge 2: Impact of geopolitical risk on supply efficiency,” he continued. “Solution: Build more non-Chinese production locations.”

He observes that Apple has already, “been implementing both solutions and is expected to accelerate progress in the foreseeable future.”

This is broadly in line with Apple’s quest to build a more resilience supply chain.

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