Apple is relying on factories in China more than ever


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China continues to be the epicenter of Apple's manufacturing.
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Apple may be trying to wean itself off manufacturing in China, but despite its use of factories in Brazil and India, it’s actually relying on China more than ever.

According to Reuters, the majority of Apple suppliers have become increasingly concentrated in China. Although Apple uses small factories outside the country, these are typically used only for small domestic runs.

The report notes that:

Reuters analyzed five years’ worth of supply chain data published by Apple. The data includes more than 750 locations each year between 2015 and 2019 for the California company’s top 200 suppliers based on Apple’s spending. Apple does not disclose how much it spends with each, and the companies on the list can change as different suppliers make the top-200 cutoff among Apple’s thousands of suppliers.

Reuters sorted the data and calculated the overall portion of Apple’s supply chain in China. In a few cases each year, Apple did not provide a specific address and Reuters excluded that location.”

Expanding… within China

Overwhelmingly, it shows that most of Apple’s contract work involves companies working in China. This covers the companies which “sell it chips, glass, aluminum casings, cables, circuit boards and much more.” In 2015, 44.9% of Apple’s suppliers were in China. This year, that figure stands at 47.6%.

When Apple has contracted new factories to carry out work, more of these have been in China than outside. For instance, Foxconn has expanded from 19 factories in 2015 to 29 in 2019. Pegatron, meanwhile, has expanded from 8 to 12.

While Apple has asked its suppliers to explore manufacturing overseas, it’s a tall order. Apple’s enormous scale means that it is stuck with China in a way that other companies with smaller demands are not. Vietnam, for instance, has a population less 1/10 that of China. The accompanying lack of infrastructure means it’s hard to find places that can produce 600,000 iPhones per day.

All of this could change over time. But, for now, it highlights why Apple is at the mercy of trade tariffs.

Source: Reuters


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