How Apple built a supply chain in China over two decades, spending billions and embedding staff in factories, creating a dependence before US tensions escalated
The company spent two decades and billions of dollars building a supply chain of unprecedented sophistication. Now, a reckoning is coming
Financial TimesPatrick McGee
Context & Ripple Effects
Apple’s reliance on China was already deepening despite earlier diversification into India and Brazil, according to supply-chain data tracking Apple’s footprint. The account of two decades of investment and factory-level staffing explains why that reliance is difficult to unwind.
Apple’s China-centered production base leaves Apple directly exposed to the operational and geopolitical risks attached to a supply chain it spent decades building.
Apple must preserve close factory coordination in China while attempting to reduce the dependence created by its embedded operating model.
Second-order effects
India, Vietnam, and Malaysia become more important to Apple’s diversification effort, but India’s documented supply-chain, labor, and automation constraints limit how quickly it can absorb iPhone production.
If Apple’s diversification continues, consumer-electronics manufacturing is likely to move toward multi-country production networks rather than a single China-centered system, with resilience competing against the efficiency of tightly integrated factory ecosystems.
The difficulty of reproducing Apple’s China operations suggests that manufacturing diversification will be gradual and shaped by each country’s ability to develop connected supplier and production capacity.
The trend: Apple’s supply-chain strategy is shifting from concentrated China dependence toward gradual multi-country sourcing, constrained by the time required to replicate integrated manufacturing networks.
“All the tech competence China has now is not the product of Chinese tech leadership drawing in Apple. It's the product of Apple going in there and building the tech competence.” https://www.ft.com/...
Very well-written and thorough reporting in this article by @PatrickMcGee_ on how Apple and China have become one, making it nearly impossible to separate their fortunes. https://www.ft.com/... via @financialtimes
Super interesting, deep report. Here is the lede, “In 2007, Nokia had 900mn users. Its market dominance seemed so great that Forbes ran a cover story on the company asking ‘Can anyone catch the cell phone king?’ The same year, Apple launched the iPhone.” https://www.ft.com/...
“Apple was starting to build up a supply and manufacturing operation of such complexity, depth and cost that the company's fortunes have become tied to China in a way that cannot easily be unwound.” https://giftarticle.ft.com/...
Fascinating two-part piece by @FT's @PatrickMcGee_ on Apple's ascendancy thought its deep investment in China to create a world class supply chain and the challenges that now poses. https://giftarticle.ft.com/... https://twitter.com/...
👀"For Chinese Android phones, we only have to assign 100 workers per production line, but we need 1,200 for the iPhone," said Michael Chiang, Foxconn's iPhone business chief. https://www.bloomberg.com/...
This fascinating piece on how Apple made itself dependent on vast & complex production facilities in China underlines how foolish all the 1990s-2000s chatter about a ‘weightless’ economy & ‘living on thin air’ was. The iPhone, epitome of globalisation... 1/ https://www.ft.com/...
“(Apple's) extraordinary success story has also created Apple's biggest vulnerability: its dependence on a single country, China, which under President Xi Jinping has grown increasingly authoritarian and estranged from the west.” @PatrickMcGee_ https://www.ft.com/...
This by @PatrickMcGee_ is utterly fascinating. The theory that a significant part of the explanatory burden for China's world-historical supremacy in electronics manufacturing is shouldered personally by Tim Cook is interesting, to say the least. https://www.ft.com/...
Extraordinary piece by @PatrickMcGee_ about Apple's intricate and deep supply chains in China. And again a proof of how Chinese suppliers have outperformed the rest of the world in expertise, access to machinery and components - and scale. https://www.ft.com/...
'More than 95 per cent of iPhones, AirPods, Macs and iPads are made in China. That contrasts with rivals such as Samsung, which have sharply cut back manufacturing in China... “This mess is [Tim Cook's] fault,” says a former Apple veteran.' https://www.ft.com/...