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I assumed it was firstly access to Chinese manufacturing. They can probably still make humongous profits without the Chinese market, but presumably their global

I assumed it was firstly access to Chinese manufacturing. They can probably still make humongous profits without the Chinese market, but presumably their global sales rely on first manufacturing in China?

brandall10 5y ago
China is their number 1 market to expand. If market cap is to go up, China is instrumental there. If anything, continuing to manufacture in China is likely required for that market expansion. Otherwise I feel they would have started to diversify to other, less politically tenuous markets.
arcticbull 5y ago
Yep, and it's likely that China is the only place they could actually manufacture their products. China isn't the cheapest place to make things anymore, and it hasn't been in a long time - that's been supplanted by Bangladesh, Vietnam, etc. It's even within spitting distance to manufacture in the US. Companies manufacture complex electronics products in China because everyone manufactures there. The skills are there, factories are there - but most importantly, the supply chains are there. You can drive a truck from factory to factory to pick up all the pieces you need. Then drop the truck off at Foxconn. They'll make the products and you can put them back into the truck and drop them off at the port or rail yard. That's not something you can just replace overnight.
- tooltalk 5y ago
  Samsung is the largest smartphone-maker in the world (and has been for much of past 10+ years). They ceased all their phone-making operation in China and left for Vietnam a couple of years ago (also most recently closed their last display, shipbuilding operation) -- along with 200+ suppliers, plus 20+ new domestic suppliers created there along the way. Now, most of Samsung phones are made in Vietnam and their output there accounts for some 30% of Vietnam's export and 20% of their GDP (2019). I'm very skeptical that China is the only place Apple can make their products. Sure, Apple doesn't actually "manufacture" anything -- the company outsourced it to Taiwnese CM's like Foxconn, Wistron, and others who have cleary demonstrated that they have no competence, experience, or even desire to build things outside China (see Foxconn's misadventures in Brazil, Wisconsin US). But that shouldnt' be surprising considering that their business model entirely depends on ginormous state subsidies and seemingly unlimited supply of young, unskilled laborers from rural China. Also consider the fact that most critical, high-value components come from not China, but South Korea, Japan, the US (some via TSMC in Taiwan) -- China still makes less than 5% of all chips produced globally (as of 2019 according to US SIA). Of course, they are all assembled/packaged there, but China's contribution to this whole process still accounts for less than 4% of overall value. I just don't buy the argument that China as the world's electronic supply-chain can't be replaced.
  - MangoCoffee 5y ago
    >I'm very skeptical that China is the only place Apple can make their products I'm skeptical as well since Foxconn also open a factory in India for Apple. https://asia.nikkei.com/Business/Technology/Foxconn-set-to-make-iPhone-12-in-India-shifting-from-China https://asia.nikkei.com/Business/Technology/Foxconn-set-to-m...
    - adventured 5y ago
      And Samsung is able to produce a large share of their smartphones in Vietnam (180 million annual unit capacity). There's clearly no reason Apple can't further distribute production across India, Vietnam, Indonesia and a few other nations, while reducing dependency on China. The bigger issue is they want to continue to have privileged access to the Chinese consumer market.
  - sangnoir 5y ago
    Samsung likely has fewer suppliers compared to Apple. And it's much easier to coordinate its supply chain with other Samsung subsidiaries, even across borders. China can as the electronics supply-chain can absolutely be replaced - at a cost.
    - OldManAndTheCpp 5y ago
      Why does Samsung likely have fewer suppliers? Samsung makes more varieties of phones, and their phones are technically similar to Apple phones.
      - sangnoir 5y ago
        Because Samsung subsidiaries makes a bunch of those components - something Apple doesn't do.
    - tooltalk 5y ago
      I intentionally emphasized the fact that Samsung is the largest smartphone maker and that more than 200 suppliers moved along with the company to make that transition (and 20+ new domestic suppliers). While Apple surpassed Samsung's revenue in recent years, the depth and scale of Samsung's manufacturing are much greater -- not only b/c they make so many different and high volume products, but they also compete with many suppliers in their supply-chain. I always cringed at Tim Apple's deceptive rambling on the industry's dependence and necessity of supply-chain in China and feared that he was cooking up something more sinister behind the curtain. I recall as far back as 2012 when Tim defended their oversea outsourcing practices on CBS by claiming that "Apple iPhone engines were made in America," even as they were working to offshore that to TSMC in Taiwan shortly afterward.
- nradov 5y ago
  Apple manufactures iPhones in India for local sales. https://www.business-standard.com/article/companies/made-in-india-iphones-make-apple-s-70-domestic-market-sales-121090600008_1.html https://www.business-standard.com/article/companies/made-in-...
- reaperducer 5y ago
  China is the only place they could actually manufacture their products And yet, the Apple products I bought for my wife this Christmas state "Made in Vietnam" on the box. And other electronics I've purchased for her recently were similarly not made in China. China hasn't been the "only" place to manufacture tech for several years now. It's an outdated cliché.
  - pbhjpbhj 5y ago
    Don't know about Vietnamese laws, nor your local laws, but "made in Britain" can be put together in Britain. There's a good chance it's still relying on chips and circuits made in China? China has never been the only place to manufacture tech ever South Korea, Japan, even Germany/France/USA for us in the UK (LG has grown phenomenally well the last couple of years, Japan in the 80s-90s was the place for UK electronics). But China seems to have been the principal place for affordable consumer electronics [chips/circuits] for at least the last decade.
- 14 5y ago
  This is true and sadly my favourite motorcycle cycle company Honda started building some of their bikes in Vietnam. Whether this will effect build quality I am not sure but not as impressed as made in Japan as I used to be.
MangoCoffee 5y ago
>their global sales rely on first manufacturing in China? for the past years but China's wages is increasing and Chinese crack down on tech company like Alibaba, Tencent, DiDi...etc. would it extend to foreign company? Not to mention the rise of Chinese domestic tech company like Xiaomi. it look like Apple is not making their money back in China with this deal. "To placate Beijing, though, some capital may have served more like donations to state enterprises and local governments. The company generated $249 billion of sales in Greater China over the last five years, less than the pledged amount." https://www.reuters.com/breakingviews/apples-ugly-china-deal-mostly-bought-time-2021-12-08/ https://www.reuters.com/breakingviews/apples-ugly-china-deal...
- deleted 5y ago
  [deleted]
- alliao 5y ago
  even less when you take out Taiwan's revenue from that 249bn
silisili 5y ago
Apple is big enough and rich enough that they don't need Chinese manufacturing. It is a nicety, and probably cheaper, but they could have probably picked about any country to do it and set up shop. As pointed out, Samsung does all their mfg in Korea and Vietnam. Oneplus setup shop in India for some devices...and Apple is much more powerful than BBK.
- acomjean 5y ago
  Their cpus are manufactured in Taiwan, which is kinda China. Those bleeding edge components are important to excellent performance of their products.
  - ethbr0 5y ago
    I'm sure China would be quite happy if Taiwan was even kinda China.
  - dublin 5y ago
    I'm sure China knows that if they do ever actually invade Taiwan, then there will be hundreds of agents, if not outright military actions, to destroy or sabotage the critical parts of Taiwanese industry rather than let them fall into the hands of the CCP. (For instance, I can't imagine any of the key ASML machines would survive without being quite thoroughly destroyed by thermite to keep their secrets from falling into Chinese hands.) This would nearly completely cripple the world's tech economy for a decade, but that is far better then becoming vassals to CCP tyranny.
    - vineyardmike 5y ago
      I heard rumors that the latest TSMC factories have a government-controlled self-destruct feature for this reason.
  - SllX 5y ago
    Taiwan is an independent nation.

brandall10 5y ago

China is their number 1 market to expand. If market cap is to go up, China is instrumental there. If anything, continuing to manufacture in China is likely required for that market expansion. Otherwise I feel they would have started to diversify to other, less politically tenuous markets.

arcticbull 5y ago

Yep, and it's likely that China is the only place they could actually manufacture their products. China isn't the cheapest place to make things anymore, and it hasn't been in a long time - that's been supplanted by Bangladesh, Vietnam, etc. It's even within spitting distance to manufacture in the US. Companies manufacture complex electronics products in China because everyone manufactures there. The skills are there, factories are there - but most importantly, the supply chains are there. You can drive a truck from factory to factory to pick up all the pieces you need. Then drop the truck off at Foxconn. They'll make the products and you can put them back into the truck and drop them off at the port or rail yard. That's not something you can just replace overnight.

tooltalk 5y ago
Samsung is the largest smartphone-maker in the world (and has been for much of past 10+ years). They ceased all their phone-making operation in China and left for Vietnam a couple of years ago (also most recently closed their last display, shipbuilding operation) -- along with 200+ suppliers, plus 20+ new domestic suppliers created there along the way. Now, most of Samsung phones are made in Vietnam and their output there accounts for some 30% of Vietnam's export and 20% of their GDP (2019). I'm very skeptical that China is the only place Apple can make their products. Sure, Apple doesn't actually "manufacture" anything -- the company outsourced it to Taiwnese CM's like Foxconn, Wistron, and others who have cleary demonstrated that they have no competence, experience, or even desire to build things outside China (see Foxconn's misadventures in Brazil, Wisconsin US). But that shouldnt' be surprising considering that their business model entirely depends on ginormous state subsidies and seemingly unlimited supply of young, unskilled laborers from rural China. Also consider the fact that most critical, high-value components come from not China, but South Korea, Japan, the US (some via TSMC in Taiwan) -- China still makes less than 5% of all chips produced globally (as of 2019 according to US SIA). Of course, they are all assembled/packaged there, but China's contribution to this whole process still accounts for less than 4% of overall value. I just don't buy the argument that China as the world's electronic supply-chain can't be replaced.
- MangoCoffee 5y ago
  >I'm very skeptical that China is the only place Apple can make their products I'm skeptical as well since Foxconn also open a factory in India for Apple. https://asia.nikkei.com/Business/Technology/Foxconn-set-to-make-iPhone-12-in-India-shifting-from-China https://asia.nikkei.com/Business/Technology/Foxconn-set-to-m...
  - adventured 5y ago
    And Samsung is able to produce a large share of their smartphones in Vietnam (180 million annual unit capacity). There's clearly no reason Apple can't further distribute production across India, Vietnam, Indonesia and a few other nations, while reducing dependency on China. The bigger issue is they want to continue to have privileged access to the Chinese consumer market.
- sangnoir 5y ago
  Samsung likely has fewer suppliers compared to Apple. And it's much easier to coordinate its supply chain with other Samsung subsidiaries, even across borders. China can as the electronics supply-chain can absolutely be replaced - at a cost.
  - OldManAndTheCpp 5y ago
    Why does Samsung likely have fewer suppliers? Samsung makes more varieties of phones, and their phones are technically similar to Apple phones.
    - sangnoir 5y ago
      Because Samsung subsidiaries makes a bunch of those components - something Apple doesn't do.
  - tooltalk 5y ago
    I intentionally emphasized the fact that Samsung is the largest smartphone maker and that more than 200 suppliers moved along with the company to make that transition (and 20+ new domestic suppliers). While Apple surpassed Samsung's revenue in recent years, the depth and scale of Samsung's manufacturing are much greater -- not only b/c they make so many different and high volume products, but they also compete with many suppliers in their supply-chain. I always cringed at Tim Apple's deceptive rambling on the industry's dependence and necessity of supply-chain in China and feared that he was cooking up something more sinister behind the curtain. I recall as far back as 2012 when Tim defended their oversea outsourcing practices on CBS by claiming that "Apple iPhone engines were made in America," even as they were working to offshore that to TSMC in Taiwan shortly afterward.
nradov 5y ago
Apple manufactures iPhones in India for local sales. https://www.business-standard.com/article/companies/made-in-india-iphones-make-apple-s-70-domestic-market-sales-121090600008_1.html https://www.business-standard.com/article/companies/made-in-...
reaperducer 5y ago
China is the only place they could actually manufacture their products And yet, the Apple products I bought for my wife this Christmas state "Made in Vietnam" on the box. And other electronics I've purchased for her recently were similarly not made in China. China hasn't been the "only" place to manufacture tech for several years now. It's an outdated cliché.
- pbhjpbhj 5y ago
  Don't know about Vietnamese laws, nor your local laws, but "made in Britain" can be put together in Britain. There's a good chance it's still relying on chips and circuits made in China? China has never been the only place to manufacture tech ever South Korea, Japan, even Germany/France/USA for us in the UK (LG has grown phenomenally well the last couple of years, Japan in the 80s-90s was the place for UK electronics). But China seems to have been the principal place for affordable consumer electronics [chips/circuits] for at least the last decade.
14 5y ago
This is true and sadly my favourite motorcycle cycle company Honda started building some of their bikes in Vietnam. Whether this will effect build quality I am not sure but not as impressed as made in Japan as I used to be.

MangoCoffee 5y ago

>their global sales rely on first manufacturing in China? for the past years but China's wages is increasing and Chinese crack down on tech company like Alibaba, Tencent, DiDi...etc. would it extend to foreign company? Not to mention the rise of Chinese domestic tech company like Xiaomi. it look like Apple is not making their money back in China with this deal. "To placate Beijing, though, some capital may have served more like donations to state enterprises and local governments. The company generated $249 billion of sales in Greater China over the last five years, less than the pledged amount." https://www.reuters.com/breakingviews/apples-ugly-china-deal-mostly-bought-time-2021-12-08/ https://www.reuters.com/breakingviews/apples-ugly-china-deal...

deleted 5y ago
[deleted]
alliao 5y ago
even less when you take out Taiwan's revenue from that 249bn

silisili 5y ago

Apple is big enough and rich enough that they don't need Chinese manufacturing. It is a nicety, and probably cheaper, but they could have probably picked about any country to do it and set up shop. As pointed out, Samsung does all their mfg in Korea and Vietnam. Oneplus setup shop in India for some devices...and Apple is much more powerful than BBK.

acomjean 5y ago
Their cpus are manufactured in Taiwan, which is kinda China. Those bleeding edge components are important to excellent performance of their products.
- ethbr0 5y ago
  I'm sure China would be quite happy if Taiwan was even kinda China.
- dublin 5y ago
  I'm sure China knows that if they do ever actually invade Taiwan, then there will be hundreds of agents, if not outright military actions, to destroy or sabotage the critical parts of Taiwanese industry rather than let them fall into the hands of the CCP. (For instance, I can't imagine any of the key ASML machines would survive without being quite thoroughly destroyed by thermite to keep their secrets from falling into Chinese hands.) This would nearly completely cripple the world's tech economy for a decade, but that is far better then becoming vassals to CCP tyranny.
  - vineyardmike 5y ago
    I heard rumors that the latest TSMC factories have a government-controlled self-destruct feature for this reason.
- SllX 5y ago
  Taiwan is an independent nation.