No dude - this outflow is recent and as a result of Covid restrictions.
Apple’s tech supply chain shows difficulty of dumping China
Bloomberg Intelligence estimates it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones have been made. Scores of local component suppliers -- not to mention modern and efficient transport, communication and electricity supplies -- make it particularly difficult to get out of the world’s second-largest economy.
“With China accounting for 70% of global smartphone manufacturing and leading Chinese vendors accounting for nearly half of global shipments, the region has a well-developed supply chain, which will be tough to replicate -- and one Apple could lose access to if it moves,” BI’s report from analysts Steven Tseng and Woo Jin Ho said.
American companies have had a growing list of reasons to downgrade their ties with China in recent years. Former President Donald Trump’s tariffs. Beijing’s stringent Covid lockdowns. The US-Sino standoff over Taiwan. Political pressure to “friend-shore” supply chains toward nations aligned with...
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Hard to match
Cook emphasized Apple’s broader manufacturing footprint on the company’s most recent earnings call. “Our supply chain is truly global, and so the products are made everywhere,” he said. “We continue to look at optimizing. We learn something every day and make changes.”
China, however, has spent years developing a combination of production incentives, local engineering talent and a cohesive supply chain ecosystem that will be difficult to replicate elsewhere. As Cook put it in one
2015 interview, “You can take every tool and die maker in the United States and probably put them in a room that we’re currently sitting in. In China, you would have to have multiple football fields.”
Bryan Ma, VP of device research at market intelligence firm IDC, said there’s been “increasing pressure to diversify product assembly outside of China, but doing so won’t be easy given that the proximity to component suppliers is a key reason for staying in China.”
“I’m sure that vendors will explore their options, especially as governments dangle incentives for local assembly,” Ma added. “But if the entire supply chain doesn’t move with them, then the logistics of moving components to the assembly facilities becomes a challenge.”
A major market
Complicating things further for Apple is the fact that China is its biggest market outside the United States.
Apple currently accounts for 18% of the Chinese smartphone market and China makes up nearly a quarter of Apple’s global sales, according to Amber Liu, a Shanghai-based smartphone analyst at tech research firm Canalys.
In short, China is “where a big part of the growth market is,” said Gad Allon, director of the management and technology program at the University of Pennsylvania whose research focuses on supply chains. “Apple has many, many reasons not to rock the boat,” he said, or risk ending up on the wrong side of China’s government.
Meanwhile, in what could be a sign of its worries over demand in the country, Apple this week offered its Chinese customers
discounts as high as 600 yuan ($89) on its latest iPhone models for a limited time. It’s rare for Apple to offer such promotions.
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