HONG KONG, CHINA - DECEMBER 10, 2016: Apple Store window in Central District. Apple Inc. is an American multinational technology.

How did Apple’s supply chain evolve?

Image credit: Dreamstime

A visual analysis shows how Apple’s supplier network has evolved over past years, and what these changes mean for the tech giant’s future and competition.

Apple announced in June that it will begin making its own chips, confirming insider predictions of a move away from Intel chip dependence. CEO Tim Cook said the company will produce processors for its own desktops and laptops, which marks a big strategic shift.

It could affect Apple’s Intel supplier network in nine locations: three in the US (previously four), two in China and one each in Israel, Vietnam, Malaysia and Ireland.

Our visual analysis shows that the DNA of Apple suppliers changed considerably between 2015 and 2019, adding nearly 50 new locations, with Chinese manufacturing sites accounting for nearly half (see Marimekko chart).

Apple's supplier network

Image credit: E&T analysis

Presence in China surged to 47 per cent last year, up from 44 per cent in 2015 as presence declined in the US. However, President Trump is pressuring tech companies to manufacture in the US. In an interview with Fox Business Network, Trump floated the idea of a tax to punish firms that produce outside the country: “If we wanted to put up our own border, like other countries do to us, Apple would build 100 per cent of their product in the United States.”

India shows the biggest boost in suppliers, with eight locations listed, up from zero in 2015. There were also more in France but Apple pulled suppliers out of Malaysia (down 26 per cent) and some production in Germany, Israel, the UK and Ireland.

Dependence on Taiwanese supplier Foxconn surged by 59 per cent to 35 locations in 2019. Last year, Apple was accused of human rights violations at a Zhengzhou Foxconn factory, dubbed the largest iPhone factory in the world.

Apple lists five different locations in Zhengzhou. Covid-19 epidemic affected Apple, though some suppliers reopened factories quickly. Foxconn’s Zhengzhou factory sent workers back in April. 

Apple may soon count fewer Chinese locations. Last year, when the trade war between the US and China reached a pinnacle moment, Apple evaluated how much it would cost to shift nearly a third of its supply chain out of China, to South-East Asia. It’s an equivalent of more than 100 Chinese locations, according to E&T ’s calculations. But the cuts might be deeper and affect a wider second- and lower-tier supplier network.

The Trump administration now calls for sanctions on Chinese tech companies who sold or supplied the Chinese military. China could retaliate with similar sanctions against the American tech giants should Trump’s intentions prevail. In 2013, the US defence department approved Apple devices for Pentagon employees.

Chinese suppliers that Apple and Samsung share

Image credit: E&T analysis

If Apple loses Chinese suppliers, it could harm competition too, notably against Samsung, one of Apple’s biggest competitors. With 29 locations in China, Samsung has a much smaller presence there. But the two companies share suppliers in China, E&T finds (see chart).

Both get stuff produced by Japanese TDK and its Chinese factories - though, Apple has 10 and Samsung only one location. Other overlaps include Murata Manufacturing, AAC Technologies, GoerTek, BYD and Samsung Electro-Mechanics. Should Apple leave China, Samsung might see an opportunity to rake those parts of Apple’s supply chain.

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