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Is Apple going to really start moving out of China? So for only 2% of iPhones are assembled out of China and only one factory in Vietnam is being build. https:

by slaw 4y ago

Is Apple going to really start moving out of China? So for only 2% of iPhones are assembled out of China and only one factory in Vietnam is being build. https://appleinsider.com/articles/22/09/30/apple-will-take-a-decade-to-move-just-some-production-out-of-china https://appleinsider.com/articles/22/09/30/apple-will-take-a...

parker_mountain 4y ago
They are also moving into India. I would expect they're very happy to encourage protectionist laws encouraging/requiring them to build phones in countries they sell to. It allows them to tell their Chinese partners that they have no choice in moving some manufacturing away.
threeseed 4y ago
I don't know why Apple isn't more diversified. Forecasts are that China wants to forcibly reclaim Taiwan much sooner than anticipated. And maybe they are confident that China wouldn't retaliate against them but surely that's not a risk worth taking. Foxconn has been asked to ramp up production in India but not sure if you would call it a success or not.
- lotsofpulp 4y ago
  Is it possible even Apple does not have the resources to single handedly diversify the world’s most complicated supply chains?
  - radicaldreamer 4y ago
    It takes a decade to build up a supply chain for complex electronics products. Even though Apple, Foxconn, Wistron have started building in India, it's going to be a while before it's able to service the capacity that China is at and even longer before margins (both quality and profit) are up to where they are with their Chinese lines (which are more like city sized factories with tons of supporting infrastructure).
    - rvnx 4y ago
      There is also this thing that working in Foxconn factories is apparently very though. And pushing the problem to third-parties seems to be very convenient in terms of reputation and salaries/contract.
    - borissk 4y ago
      Yeah, Samsung somewhat recently started assembling phones in India, but they are a lot lower build quality compared to their Vietnamese or SK made units. Probably within a year or two India factory will catch up on quality, but unlike Samsung (who have a lot of budget models) Apple can't afford to ship internationally bad quality iPhones for a couple of years.
      - boundlessdreamz 4y ago
        What's the source for lower build quality of Samsung's Indian made handsets?
        borissk 4y ago
        Personal experience.
  - rootusrootus 4y ago
    Isn't the biggest problem with iPhone production that the volume is so high that very few places aside from China have the requisite number of engineers to build such a plant?
    - shagie 4y ago
      Remember hearing about Detroit back in the day? Where the transmission was made down the street from the auto factory. You probably didn't need to go more than 20 miles from the auto factory in Detroit to get 90% of the car parts. If one supplier had a problem, you'd just go to another that was only slightly more distant. Shenzen is like that. Everything you need for electronics manufacturing of nearly anything is located in the city. This means that if part of the supply chain is disrupted in normal times, you could go get the same part from somewhere else not far away. Today, the United States auto manufacturing isn't that way... and frankly it isn't even fair to say "United States auto manufacturing" - https://cimg3.ibsrv.net/gimg/www.corvetteforum.com-vbulletin/1300x818/5cbfbc71_471f_4736_92b5_20941e3169a1_733b116a4018aafc82994f5c7c7b191a1387202d.jpeg https://cimg3.ibsrv.net/gimg/www.corvetteforum.com-vbulletin... So, here's the problem that Anyone building an iPhone would have - where do you get the capacitors on the board from? how much lead time do you need to keep the supply going? What happens if the supplier isn't able to send them? How big of an industrial base do you need to make all the parts and how distributed is that industrial base?
      - mook 4y ago
        But the iPhones aren't assembled anywhere near Shenzen? The article mentions Zhengzhou which is about halfway up China (where Shenzen is at the southern edge).
- Veliladon 4y ago
  One of the reasons Shenzhen is iPhone assembly city is because there are so many little ancillary providers around for all the surface mount components that are common on PCBs. If I'm running a PCB assembly line and my primary supplier of surface mount capacitors is the only guy within 50 miles, where do I get replacements from if something happens like there's a fire in his factory and it goes offline? In Shenzhen you go to the next guy down the street who's selling the exact same part. So instead of being down for three days while finding a way to get an additional supplies airlifted in you can have probably have another supplier up and going before you run out of what's left in the lean manufacturing pipeline. Before making the move to any labor market concerns like those have to be addressed or at least the risks mitigated. That takes time and costs serious money. As the SMT industry ramps up in more locations it'll be easier to diversify assembly locations.
  - porknubbins 4y ago
    Building diy devices with microcontrollers feels like a microcosm of this. Months of designing and coding and in the end you get hung up on some dumb connector that takes a month to ship. If I had an Aliexpress warehouse down the street I would be located there too.
- summerlight 4y ago
  Infrastructure and supply chain quality in China are on a completely different level to other developing countries. It's not really easy to break this coupling unless you're willing to make significant investments to partners in the new country. Samsung was forced to do that for Vietnam largely due to political instability. Now it's Apple's turn but it'll take several years to ramp up.
- mlindner 4y ago
  > I don't know why Apple isn't more diversified. Possibly because they've got a former CFO running the company which causes a myopic view towards profit rather than interesting hardware development. The age of apple dropping new product idea after new product idea is long past.
  - ninth_ant 4y ago
    Isn’t that argument directly opposite? A finance-oriented CEO that is concerned with profits should be more concerned with instability and risk, compared to a product oriented CEO who would be concerned about the next hot thing.
  - scarface74 4y ago
    Tim Cook was never the CFO.
  - mlindner 4y ago
    I can't edit or delete the above post so please disregard it. It is incorrect.
- piggybox 4y ago
  in exchange for the Chinese market I guess
Analemma_ 4y ago
I guarantee you the US government is currently having backroom conversations with various companies that go, "if/when China invades Taiwan, we're cutting off all trade and we're not going to wait for you to be ready". It will probably be advantageous to be one of the ones already safely decoupled by the time this happens.
- dannyw 4y ago
  You really think so? EU are still buying Russian gas today.
ksec 4y ago
Why would they do that when they promised CCP to invest into the Supply Chains.

by slaw 4y ago

parker_mountain 4y ago

They are also moving into India. I would expect they're very happy to encourage protectionist laws encouraging/requiring them to build phones in countries they sell to. It allows them to tell their Chinese partners that they have no choice in moving some manufacturing away.

threeseed 4y ago

I don't know why Apple isn't more diversified. Forecasts are that China wants to forcibly reclaim Taiwan much sooner than anticipated. And maybe they are confident that China wouldn't retaliate against them but surely that's not a risk worth taking. Foxconn has been asked to ramp up production in India but not sure if you would call it a success or not.

lotsofpulp 4y ago
Is it possible even Apple does not have the resources to single handedly diversify the world’s most complicated supply chains?
- radicaldreamer 4y ago
  It takes a decade to build up a supply chain for complex electronics products. Even though Apple, Foxconn, Wistron have started building in India, it's going to be a while before it's able to service the capacity that China is at and even longer before margins (both quality and profit) are up to where they are with their Chinese lines (which are more like city sized factories with tons of supporting infrastructure).
  - rvnx 4y ago
    There is also this thing that working in Foxconn factories is apparently very though. And pushing the problem to third-parties seems to be very convenient in terms of reputation and salaries/contract.
  - borissk 4y ago
    Yeah, Samsung somewhat recently started assembling phones in India, but they are a lot lower build quality compared to their Vietnamese or SK made units. Probably within a year or two India factory will catch up on quality, but unlike Samsung (who have a lot of budget models) Apple can't afford to ship internationally bad quality iPhones for a couple of years.
    - boundlessdreamz 4y ago
      What's the source for lower build quality of Samsung's Indian made handsets?
      - borissk 4y ago
        Personal experience.
- rootusrootus 4y ago
  Isn't the biggest problem with iPhone production that the volume is so high that very few places aside from China have the requisite number of engineers to build such a plant?
  - shagie 4y ago
    Remember hearing about Detroit back in the day? Where the transmission was made down the street from the auto factory. You probably didn't need to go more than 20 miles from the auto factory in Detroit to get 90% of the car parts. If one supplier had a problem, you'd just go to another that was only slightly more distant. Shenzen is like that. Everything you need for electronics manufacturing of nearly anything is located in the city. This means that if part of the supply chain is disrupted in normal times, you could go get the same part from somewhere else not far away. Today, the United States auto manufacturing isn't that way... and frankly it isn't even fair to say "United States auto manufacturing" - https://cimg3.ibsrv.net/gimg/www.corvetteforum.com-vbulletin/1300x818/5cbfbc71_471f_4736_92b5_20941e3169a1_733b116a4018aafc82994f5c7c7b191a1387202d.jpeg https://cimg3.ibsrv.net/gimg/www.corvetteforum.com-vbulletin... So, here's the problem that Anyone building an iPhone would have - where do you get the capacitors on the board from? how much lead time do you need to keep the supply going? What happens if the supplier isn't able to send them? How big of an industrial base do you need to make all the parts and how distributed is that industrial base?
    - mook 4y ago
      But the iPhones aren't assembled anywhere near Shenzen? The article mentions Zhengzhou which is about halfway up China (where Shenzen is at the southern edge).
Veliladon 4y ago
One of the reasons Shenzhen is iPhone assembly city is because there are so many little ancillary providers around for all the surface mount components that are common on PCBs. If I'm running a PCB assembly line and my primary supplier of surface mount capacitors is the only guy within 50 miles, where do I get replacements from if something happens like there's a fire in his factory and it goes offline? In Shenzhen you go to the next guy down the street who's selling the exact same part. So instead of being down for three days while finding a way to get an additional supplies airlifted in you can have probably have another supplier up and going before you run out of what's left in the lean manufacturing pipeline. Before making the move to any labor market concerns like those have to be addressed or at least the risks mitigated. That takes time and costs serious money. As the SMT industry ramps up in more locations it'll be easier to diversify assembly locations.
- porknubbins 4y ago
  Building diy devices with microcontrollers feels like a microcosm of this. Months of designing and coding and in the end you get hung up on some dumb connector that takes a month to ship. If I had an Aliexpress warehouse down the street I would be located there too.
summerlight 4y ago
Infrastructure and supply chain quality in China are on a completely different level to other developing countries. It's not really easy to break this coupling unless you're willing to make significant investments to partners in the new country. Samsung was forced to do that for Vietnam largely due to political instability. Now it's Apple's turn but it'll take several years to ramp up.
mlindner 4y ago
> I don't know why Apple isn't more diversified. Possibly because they've got a former CFO running the company which causes a myopic view towards profit rather than interesting hardware development. The age of apple dropping new product idea after new product idea is long past.
- ninth_ant 4y ago
  Isn’t that argument directly opposite? A finance-oriented CEO that is concerned with profits should be more concerned with instability and risk, compared to a product oriented CEO who would be concerned about the next hot thing.
- scarface74 4y ago
  Tim Cook was never the CFO.
- mlindner 4y ago
  I can't edit or delete the above post so please disregard it. It is incorrect.
piggybox 4y ago
in exchange for the Chinese market I guess

Analemma_ 4y ago

I guarantee you the US government is currently having backroom conversations with various companies that go, "if/when China invades Taiwan, we're cutting off all trade and we're not going to wait for you to be ready". It will probably be advantageous to be one of the ones already safely decoupled by the time this happens.

dannyw 4y ago
You really think so? EU are still buying Russian gas today.

ksec 4y ago

Why would they do that when they promised CCP to invest into the Supply Chains.