US-China tech war: Apple puts China squarely at the apex of supplier list, bucking talk of decoupling and scrutiny of its vendors

[qwerrty]

Samsung doesn't have the technology? wrong, san'an is just a FAB like TSMC that will produce microLED for Samsung. Just like TSMC and BOE are contracted by Apple to produce microLED for Apple. The microLED design is Samsung IP, San'an are contract manufacturing for Samsung.

It is Samsung technology.

yeah right. samsung that have many fabs of their own contracting chinese company to build for them. haha.. and fyi, the core tech for microLED displays tech is manufacturing, not design.

 

[FairAndUnbiased]

Samsung doesn't have the technology? wrong, san'an is just a FAB like TSMC that will produce microLED for Samsung. Just like TSMC and BOE are contracted by Apple to produce microLED for Apple. The microLED design is Samsung IP, San'an are contract manufacturing for Samsung.

It is Samsung technology.

So you're telling me TSMC is low tech?

You're telling me microLEDs have a complicated architecture that requires separation of design and foundry unlike most LED displays and even more complicated logic architectures like microcontrollers, DSP, memory, etc?

You're telling me Samsung Foundry is choosing to not use their own foundries for fun?

 

[dbc]

yeah right. samsung that have many fabs of their own contracting chinese company to build for them. haha.. and fyi, the core tech for microLED displays tech is manufacturing, not design.

not really, it requires significant investment in MOCVD equipment. Fortunately Chinese firms get massive government subsidies to purchase the latest MOCVD equipment from Germany, US and Japan.

And before you go there, yes China does make some low cost MOCVD equipment but Germany and the US dominates 75% of the market share.

Thanks to government subsidies and low cost labor China makes microLEDs cheaper than anyone else. Samsung and Apple are just maximising their profits by ordering from China.

 

[FairAndUnbiased]

not really, it requires significant investment in MOCVD equipment. Fortunately Chinese firms get massive government subsidies to purchase the latest MOCVD equipment from Germany, US and Japan.

And before you go there, yes China does make some low cost MOCVD equipment but Germany and the US dominates 75% of the market share.

Thanks to government subsidies and low cost labor China makes microLEDs cheaper than anyone else. Samsung and Apple are just maximising their profits by ordering from China.

Yeah labor is a major cost component for high volume products made using highly automated CVD equipment.

Maybe stick to copy pasting Google, you're out of your depth here.

 

[qwerrty]

Yeah labor is a major cost component for high volume products made using highly automated CVD equipment.

Maybe stick to copy pasting Google, you're out of your depth here.

another company that have fabs of their own and paying another company to build shit for 'em is intel. i wonder what the reason is? lol they both have access to asml machines..

 

[dbc]

Yeah labor is a major cost component for high volume products made using highly automated CVD equipment.

Maybe stick to copy pasting Google, you're out of your depth here.

did I say low cost unskilled labor? labor means anyone employed in the production and support process. This includes skilled technician, engineers, R&D and other support staff.

A skilled technician in China is much cheaper than his or her counterpart in S.Korea or Japan and the US. If it wasn't - you'd be on the first flight from the US back to your beloved China.

labor on average is 30% of revenue and is the biggest recurring cost component in any P&L. I thought Mr. I'm in the business would know that...

Look at the TSMC annual report for their 12 inch wafer business 2019.
Revenue = 1.05 billion $
labor = 247.4 million $

Reducing indirect labor costs at semiconductor companies

Industry 4.0 tools could bring new productivity and efficiency gains to indirect functions. Why do semicos hesitate to apply them to reduce indirect labor costs at semiconductor companies?

www.mckinsey.com

TSMC 2019 Annual Report

investor.tsmc.com

 

[FairAndUnbiased]

did I say low cost unskilled labor? labor means anyone employed in the production and support process. This includes skilled technician, engineers, R&D and other support staff.

A skilled technician in China is much cheaper than his or her counterpart in S.Korea or Japan and the US. If it wasn't - you'd be on the first flight from the US back to your beloved China.

labor on average is 30% of revenue and is the biggest recurring cost component in any P&L. I thought Mr. I'm in the business would know that...

Look at the TSMC annual report for their 12 inch wafer business 2019.
Revenue = 1.05 billion $
labor = 247.4 million $

Reducing indirect labor costs at semiconductor companies

Industry 4.0 tools could bring new productivity and efficiency gains to indirect functions. Why do semicos hesitate to apply them to reduce indirect labor costs at semiconductor companies?

www.mckinsey.com

TSMC 2019 Annual Report

investor.tsmc.com

Did you just put South Korean salaries on par with US??

Still haven't proven that Samsung's microLEDs are outsourced solely for cost or that microLED architecture is so complex it justifies a fabless/foundry split when more complicated architectures don't.

 

[925boy]

It’s not easy to replicate the Chinese man power it’s all good talk you can replace China. But the honest truth is you just can’t, it’s a central part in the global supply chain and soon to be the largest consumption economy in the world.

Cuz he really meant to say:

Lie, if US slap 25% tariff on Iphone, IN MY HYPOTHETICAL WORLD, then those part suppliers will follow Apple and move to another countries, too

 

[dbc]

Still haven't proven that Samsung's microLEDs are outsourced solely for cost or that microLED

really? a Samsung microLED 110' TV costs a 150,000 USD.
of course bringing the cost down is a big imperative for Samsung.

what do want me to prove next? water is wet..?

Samsung's huge MicroLED TVs start at 110 inches and go down to 76

The 110-inch 4K TV is on sale for $156,000, and Samsung teased a 76-inch size to go with the 88- and 99-inch models.

www.cnet.com

 

[j20blackdragon]

Of Apple's top 200 suppliers in 2020, 51 were based in China. I don't care if those 51 companies supplied $8.46 in parts or 84 cents; without those parts, you don't have a phone.

And without the Chinese supply chain for cobalt sulfate and lithium-ion batteries, you definitely don't have a phone (or laptops, or Tesla electric cars).

Huawei already proved they can make a phone without American parts TWO YEARS AGO. In other words, China is self sufficient. Apple is not.

Huawei Manages to Make Smartphones Without American Chips

American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei, but it may be too late: It is now building smartphones without U.S. chips.

www.wsj.com

 

[FairAndUnbiased]

really? a Samsung microLED 110' TV costs a 150,000 USD.
of course bringing the cost down is a big imperative for Samsung.

what do want me to prove next? water is wet..?

Samsung's huge MicroLED TVs start at 110 inches and go down to 76

The 110-inch 4K TV is on sale for $156,000, and Samsung teased a 76-inch size to go with the 88- and 99-inch models.

www.cnet.com

As you see here, it is a supplier/client relationship and codeveloper relationship with Sanan selling the chips to Samsung and jointly working on microLEDs, not a contractor relationship. Sanan has its own production IP for microLEDs from CSOT.

 

[beijingwalker]

Chinese mainland ousts Taiwan as Apple's biggest source of suppliers despite Trump's trade war
Number of US companies in supply chain also slides despite Trump's trade war

June 2, 2021 12:24 JST

TAIPEI -- China now boasts more Apple suppliers than any other country, a sign that Washington's attempt to untangle U.S. and Chinese supply chains has had little impact on the world's most valuable tech company.

Of Apple's top 200 suppliers in 2020, 51 were based in China, including Hong Kong, according to a Nikkei Asia analysis of the Apple Supplier List released last week, up from 42 in 2018 and knocking Taiwan out of the top spot for the first time ever. Apple did not release data for 2019.

Chinese suppliers have also helped Apple build production capacity in other Asian countries as part of the company's strategy to diversify its supply chain.

The Apple Supplier List covers 98% of the company's spending on materials, manufacturing and assembly for the preceding fiscal year. Though it does not disclose procurement values for each company, the report serves as a barometer of Apple's reliance on suppliers from different parts of the world. The report has been released almost every year since 2013. Apple did not give a reason for not releasing a report last year.

Apple is known for its rigorous quality standards, and the rise of Chinese suppliers speaks to the country's growing manufacturing and tech capabilities, as well as to its competitive prices.

Most Chinese suppliers have very similar approaches," one Apple supply chain manager told Nikkei Asia. The Chinese suppliers win orders by offering very low prices to Apple that non-China suppliers find hard to imagine, the manager said. "They are willing to take low-margin businesses that other suppliers are reluctant to pick up. This way, they could gradually level up by working with Apple and can later bid for more business the next time."

Getting into Apple's supply chain, the manager added, is a "golden ticket" for suppliers to become the best in the world.

China-based suppliers are also rapidly helping Apple increase production outside the country.

The number of Apple suppliers in Vietnam grew to 21 last year from 14 in 2018, when the trade war began. Seven of those 21 are owned by Chinese or Hong Kong-based companies. These include AirPods assemblers Luxshare Precision Industry and Goertek, which both have been producing the wireless earbuds in Vietnam since early 2020.

Most Apple-certified factories in Vietnam are in the north of the country, a growing cluster for consumer electronics gadgets.

The rise of Apple's Chinese suppliers has come at the expense of its other suppliers.

The number of Japanese suppliers has fallen to 34 from 43 in 2017 and 38 in 2018. Japan Display and Sharp, which remain on the list, face competition from Chinese display makers BOE Technology Group and Tianma Microelectronics, while Sharp and Kantatsu are up against Luxshare and Cowell in camera modules.

Taiwan -- which held the top spot on the list for more than a decade -- is also losing ground. Its 48 Apple suppliers in 2020 made the island the second-largest group after China and Hong Kong, but that represents a drop from 52 suppliers in 2017. The number was 47 in 2018.

Assemblers such as Foxconn, formally traded as Hon Hai Precision Industry, and Pegatron remain important Apple suppliers but also face competition from Chinese rivals.

Following the acquisition of an iPhone assembly plant from Wistron last year, Luxshare now also controls Pegatron's iPhone and MacBook metal frame and casing subsidiary Casetek Holdings, while Inventec, the earliest AirPods assembler, has lost a significant share in the business to Luxshare and GoerTek. Luxshare has also gained in Apple Watch assembly after Quanta Computer decided to drop out of the business last year.

The number of Apple's U.S.-based suppliers has dropped as well, to 32 last year from 37 in 2017. Most of those remaining -- such as 3M, Corning, Micron, Lumentum and Qualcomm -- supply high-value semiconductors and materials that are difficult to replace.

Apple is still one of the biggest job creators in its home country, however, responsible for 2 million jobs across all 50 states, according to the company. Apple spent over $50 billion buying from more than 9,000 U.S. suppliers and manufacturers last year, it said.

Former U.S. President Donald Trump had hoped to reduce America's reliance on China's supply chain by imposing punitive tariffs and blacklisting many Chinese companies.

So far, Apple has cut ties with only one Chinese supplier, O-Film Technology, after Washington blacklisted the touch and camera module maker over alleged human rights abuses involving China's Uighur Muslim minority.

Washington's efforts have not otherwise visibly impacted Apple's engagement with Chinese suppliers, including a growing number of newcomers.

Jeff Pu, a senior analyst with GF Securities, said China has a world-class electronics parts and assembly supply chain thanks to years of cultivation not only by Apple but also Chinese smartphone makers such as Huawei and Oppo.

"The only electronic components that China cannot yet catch up on are semiconductors," Pu said. "The growth of China's suppliers on [the] Apple Supplier List also shows that China contained the COVID-19 pandemic well in 2020."

Cost and quality are the main reasons Apple has stuck with the country despite political pressure, according to Eric Tseng, chief analyst with Isaiah Research.

"We did not see any clear sign that Apple has reduced procurement and engagement with Chinese suppliers due to geopolitical tensions or factors," Tseng said. "Apple basically chooses and qualifies its suppliers based on cost. That's why many Chinese suppliers, from Luxshare to BYD, have gained more business in the past few years."

Both analysts said that Chinese suppliers' willingness to shift production to countries like Vietnam and India reflected issues with China's own investment environment. Labor costs are rising, and it is getting harder to recruit enough production line workers during peak seasons every year, they said.

China ousts Taiwan as Apple's biggest source of suppliers

Number of US companies in supply chain also slides despite Trump's trade war

asia.nikkei.com

 

[Han Patriot]

Chinese mainland ousts Taiwan as Apple's biggest source of suppliers despite Trump's trade war
Number of US companies in supply chain also slides despite Trump's trade war

June 2, 2021 12:24 JST

TAIPEI -- China now boasts more Apple suppliers than any other country, a sign that Washington's attempt to untangle U.S. and Chinese supply chains has had little impact on the world's most valuable tech company.

Of Apple's top 200 suppliers in 2020, 51 were based in China, including Hong Kong, according to a Nikkei Asia analysis of the Apple Supplier List released last week, up from 42 in 2018 and knocking Taiwan out of the top spot for the first time ever. Apple did not release data for 2019.

Chinese suppliers have also helped Apple build production capacity in other Asian countries as part of the company's strategy to diversify its supply chain.

The Apple Supplier List covers 98% of the company's spending on materials, manufacturing and assembly for the preceding fiscal year. Though it does not disclose procurement values for each company, the report serves as a barometer of Apple's reliance on suppliers from different parts of the world. The report has been released almost every year since 2013. Apple did not give a reason for not releasing a report last year.

Apple is known for its rigorous quality standards, and the rise of Chinese suppliers speaks to the country's growing manufacturing and tech capabilities, as well as to its competitive prices.

Most Chinese suppliers have very similar approaches," one Apple supply chain manager told Nikkei Asia. The Chinese suppliers win orders by offering very low prices to Apple that non-China suppliers find hard to imagine, the manager said. "They are willing to take low-margin businesses that other suppliers are reluctant to pick up. This way, they could gradually level up by working with Apple and can later bid for more business the next time."

Getting into Apple's supply chain, the manager added, is a "golden ticket" for suppliers to become the best in the world.

China-based suppliers are also rapidly helping Apple increase production outside the country.

The number of Apple suppliers in Vietnam grew to 21 last year from 14 in 2018, when the trade war began. Seven of those 21 are owned by Chinese or Hong Kong-based companies. These include AirPods assemblers Luxshare Precision Industry and Goertek, which both have been producing the wireless earbuds in Vietnam since early 2020.

Most Apple-certified factories in Vietnam are in the north of the country, a growing cluster for consumer electronics gadgets.

The rise of Apple's Chinese suppliers has come at the expense of its other suppliers.

The number of Japanese suppliers has fallen to 34 from 43 in 2017 and 38 in 2018. Japan Display and Sharp, which remain on the list, face competition from Chinese display makers BOE Technology Group and Tianma Microelectronics, while Sharp and Kantatsu are up against Luxshare and Cowell in camera modules.

Taiwan -- which held the top spot on the list for more than a decade -- is also losing ground. Its 48 Apple suppliers in 2020 made the island the second-largest group after China and Hong Kong, but that represents a drop from 52 suppliers in 2017. The number was 47 in 2018.

Assemblers such as Foxconn, formally traded as Hon Hai Precision Industry, and Pegatron remain important Apple suppliers but also face competition from Chinese rivals.

Following the acquisition of an iPhone assembly plant from Wistron last year, Luxshare now also controls Pegatron's iPhone and MacBook metal frame and casing subsidiary Casetek Holdings, while Inventec, the earliest AirPods assembler, has lost a significant share in the business to Luxshare and GoerTek. Luxshare has also gained in Apple Watch assembly after Quanta Computer decided to drop out of the business last year.

The number of Apple's U.S.-based suppliers has dropped as well, to 32 last year from 37 in 2017. Most of those remaining -- such as 3M, Corning, Micron, Lumentum and Qualcomm -- supply high-value semiconductors and materials that are difficult to replace.

Apple is still one of the biggest job creators in its home country, however, responsible for 2 million jobs across all 50 states, according to the company. Apple spent over $50 billion buying from more than 9,000 U.S. suppliers and manufacturers last year, it said.

Former U.S. President Donald Trump had hoped to reduce America's reliance on China's supply chain by imposing punitive tariffs and blacklisting many Chinese companies.

So far, Apple has cut ties with only one Chinese supplier, O-Film Technology, after Washington blacklisted the touch and camera module maker over alleged human rights abuses involving China's Uighur Muslim minority.

Washington's efforts have not otherwise visibly impacted Apple's engagement with Chinese suppliers, including a growing number of newcomers.

Jeff Pu, a senior analyst with GF Securities, said China has a world-class electronics parts and assembly supply chain thanks to years of cultivation not only by Apple but also Chinese smartphone makers such as Huawei and Oppo.

"The only electronic components that China cannot yet catch up on are semiconductors," Pu said. "The growth of China's suppliers on [the] Apple Supplier List also shows that China contained the COVID-19 pandemic well in 2020."

Cost and quality are the main reasons Apple has stuck with the country despite political pressure, according to Eric Tseng, chief analyst with Isaiah Research.

"We did not see any clear sign that Apple has reduced procurement and engagement with Chinese suppliers due to geopolitical tensions or factors," Tseng said. "Apple basically chooses and qualifies its suppliers based on cost. That's why many Chinese suppliers, from Luxshare to BYD, have gained more business in the past few years."

Both analysts said that Chinese suppliers' willingness to shift production to countries like Vietnam and India reflected issues with China's own investment environment. Labor costs are rising, and it is getting harder to recruit enough production line workers during peak seasons every year, they said.

China ousts Taiwan as Apple's biggest source of suppliers

Number of US companies in supply chain also slides despite Trump's trade war

asia.nikkei.com

Not enough workers in China, hence got to give low end jobs to Vietnam.