Apple’s new suppliers are mostly from the Chinese mainland, up to 12, compared with 2019, according to the company’s latest supplier responsibility progress report. Experts said that this is another evidence of the growing importance of manufacturers from the Chinese mainland in Apple’s supply chain and distribution. More suppliers will join the list this year.
At least four or five additional Chinese mainland suppliers will join Apple’s supply chain this year. The reason is that China is the country least affected by the epidemic and has a more stable supply chain which offers guarantees to Apple, Luffy Lin, Chief Analyst at Witdisplay, an electronics device consulting platform, told the Global Times on Monday.
There are 98 companies from China, accounting for 49 percent of the total, including 42 from the Chinese mainland, 46 from Taiwan and 10 from Hong Kong, according to the suppliers list. Most of the suppliers are in the microchip and screen businesses.
Impacted by the technology competition between China and the US, Lin mentioned that Apple’s supply chain system will be divided into Chinese mainland and non-mainland suppliers.
“From this perspective, Apple will also increase the number of suppliers in the Chinese mainland and reduce political risks,” said Lin.
This came as the US tech company faces potential disruptions after the US government increased pressure on companies to shift their supply chain out of China and the disruption of production activities in several of its original equipment manufacturers during the pandemic, posing unprecedented challenges for the its production supplies.
During the recent outbreak in northern Vietnam that led to the closure of several local factories, Foxconn launched a recruitment campaign at several plants in the Chinese mainland offering higher bonuses to candidates and recruiters, the Global Times learned.
While it is not clear whether there is a direct link between the massive hiring in China and the lockdown in India, some industry insiders said that Foxconn is likely to diversify its business to fend off the risks of disruption of production caused by outbreaks.
The newly released report also provides a list of Apple’s global suppliers that shows 156 primary locations where manufacturing for the company takes place. The list shows the majority of suppliers are in the Chinese mainland, while 30 in the US and 10 in India.
Even if some suppliers are not from the Chinese mainland they are based there because the integration of the supply chains is much more advanced in the mainland than elsewhere, experts said.
Apple’s recent supplier list is within expectations, Ma Jihua, an industry analyst, told the Global Times, adding that because the Chinese mainland was able to contain the pandemic, which creates the conditions to kickstart production, the supply chain in the region is also much more integrated than anywhere else in the world.
The Chinese mainland has all the advantages for Apple production, with supplies ranging from small parts for a mobile phone to screens. It is not profitable for Apple to look for other suppliers that are not based there, said Ma.