Apple edges nearer to China amidst logistics adjustments
In a significant shift, San'an Optoelectronics, Baoji Titanium Industry, and Jiuquan Iron & Steel have entered the list of top Apple suppliers for the first time in 2023. This marks an increase in China-headquartered suppliers and Chinese manufacturing sites for the tech giant.
Apple's expansion in China is not limited to suppliers. Tim Cook, the company's CEO, announced the expansion of Apple's R&D center in Shanghai during his visit to China in March. During his week-long stay, Cook met with executives from key Apple suppliers like iPad assembler BYD and glass materials maker Lens Technology.
The number of Apple suppliers in China grew by 10 to 286 in 2023, making China the largest camp of Apple suppliers since 2020. Around 84% of Apple's top 187 suppliers had facilities in China in the same year.
However, Apple is not limiting its growth only to China. The number of Apple suppliers in Vietnam surged 40% to 35 in 2023, with around 37% of these suppliers being from China and Hong Kong. Apple will also increase spending on suppliers in Vietnam.
Vietnam and Thailand are currently the most popular destinations for tech companies and their suppliers. While Vietnam has been a favored destination due to its lower costs, it has recently experienced electricity and labor constraints, making Thailand an increasingly attractive alternative. Apple will consider manufacturing in Indonesia as well.
The number of Apple suppliers in Thailand grew by about a third to 24 in 2023. In India, the number of Apple suppliers remained at 14, but local conglomerate Tata Group entered the list of top suppliers for the first time.
The tech industry analyst Annabelle Hsu, specializing in supply chains, stated that while diversification is a growing global trend, shifting supply chains is a complex process that takes time. Karen Ma Li-Yen, director of emerging regions collaboration at IEK Consulting, echoed this sentiment, stating that Apple will likely continue to work with Chinese suppliers due to geopolitical considerations and cost-effectiveness.
Meanwhile, Huawei, Apple's top rival in China's premium handset segment, introduced its latest flagship Pura 70 series in China last week. Huawei's shipments in China's first quarter of 2024 jumped 69.7% from a year earlier, while Apple's plunged 19.1%. Despite this, Apple's revenue from Greater China accounted for 17% of its total revenue in the December quarter.
Apple plans to invest more than USD 250 million in its Singapore campus, but it seems the company's focus remains on its growth in Asia, particularly in China and Vietnam.
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