Apple Seeking to Build China-Based iPhone Supply Chain Exclusively for Chinese Market

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DigiTimes issued a report today highlighting Apple's apparent efforts to build a supply chain consisting entirely of China-based makers in order to manufacture iPhones specifically for the Chinese market.


The assessment is based on recent aggressive moves by Apple suppliers Luxshare and Lens Technology to acquire metal chassis plants operated in China by Taiwan-based makers, a strategy that the US tech giant has reportedly been encouraging.
Luxshare, the largest assembler of AirPods, has newly joined the iPhone assembly chain by acquiring lower-end iPhone production lines in China from Taiwan's Wistron, the sources said. To further expand its presence in the iPhone supply chain, Luxshare also has been keenly seeking to take over metal chassis plants in China from Taiwan-based firms in the iPhone supply chain.
Taiwan's metal chassis maker Catcher Technology reportedly had planned to sell 30% of its stakes in its China plants to Luxshare, but talks over the deal were suspended after Luxshare began negotiating with Pegatron's affiliate Casetek Holdings over purchasing its metal chassis plants in China, according to DigiTimes' sources.
Later, Catcher reportedly was also in talks with China's handset cover glass maker Lens Technology on selling its plants in Suzhou to the Chinese maker, but the deal hit a snag over the acquisition price, the sources said.
The moves are believed to be part of Apple's efforts to recruit more Chinese suppliers that can provide lower-cost components for iPhones for the China market. Together with the lingering pressure of US-China trade tensions, such deals are increasingly being seen as part of Apple's wider plan to diversify overseas production bases, as demonstrated in recent reports that several Apple suppliers are actively seeking to set up production facilities in India.

Article Link: Apple Seeking to Build China-Based iPhone Supply Chain Exclusively for Chinese Market
 

nicho

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Feb 15, 2008
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Consolidating production more links in the supply chain in one country is definitely an interesting approach to diversification.
 
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incoherent_1

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While on its face this looks like Apple bowing to China, it could actually be the opposite. Once they have a fully Chinese-based supply line for Chinese iPhones, they will be able to move production for all non-Chinese-bound phones outside of the country without fear of restrictions that could hobble their global supply line. Only time will tell what their goals are.
 

iDron

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Apr 6, 2010
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First, hope that developed countries in asia are not included, namely: Hong Kong, Taiwan, Korea, Japan, Singapore.

Second, the article reads a bit like Apple is planning to build entirely different models for the China market. While there are a lot of Chinese who spent a fortune on the newest Apple devices, of course they could reach a much bigger market if they would produce sth. like the iPhone 5C, but just for developing economies for example. Car manufacturers already have such kind of diversification. Especially Volkswagen sells very different models in the EU compared to the US and also compared to China. American and Korean and Japanese car makers have a similar approach, just the luxury car makers such as BMW, Mercedes, Audi do usually sell the same lineup in most markets (except for the extended wheelbase models for Asia). Maybe Apple would go for a similar kind of geographical diversification.
 

coldwaves

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May 30, 2011
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This seems to be too much speculation on Apple's intention. My understanding is that Apple is just trying to recruit more companies into its supply chain so that it does not solely rely on Foxconn, for example, for assembly.
 
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ian87w

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Please , do not include Hong Kong in this market
Hong Kong is already considered to be part of China due to the recent implementation of regulations by the Chinese government. The Chinese market now includes Hong Kong, in a literal sense.
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While on its face this looks like Apple bowing to China, it could actually be the opposite. Once they have a fully Chinese-based supply line for Chinese iPhones, they will be able to move production for all non-Chinese-bound phones outside of the country without fear of restrictions that could hobble their global supply line. Only time will tell what their goals are.
Yup. Also notice the recent focus on India.
 
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ian87w

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Makes sense to build in and for the market you are selling too. More regions should get on board with this, I would love to see EU bound devices being built in the EU and not from untrusted sources.
It saves a ton of money in logistics of shipping stuff around. Plus it can minimize things like import tariffs.
Samsung does this as well. They have factories in key countries. For example, Samsung phones sold in Indonesia are assembled locally in Indonesia, even the flagship Galaxy S and Fold phones.
 
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Aoligei

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Jul 16, 2020
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It saves a ton of money in logistics of shipping stuff around. Plus it can minimize things like import tariffs.
Samsung does this as well. They have factories in key countries. For example, Samsung phones sold in Indonesia are assembled locally in Indonesia, even the flagship Galaxy S and Fold phones.

I was reading an article with dragging to Samsung. Even though Samsung might have pullout all their manufacturing out side of China, near 30-40% of parts are still comes from China.

This is the reality, China has the most sophisticated supply chain in the world, it is kind hard for company to skip all Chinese supply chain all together.
 
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Logamaniac

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Jun 10, 2018
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Wouldn’t surprise me if they start making alternative versions of iPhones in China/for China. They’re probably tired of getting defrauded with people gutting components and then RMAing only to sell the parts or refurbing phones to resell.
 

nicho

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Feb 15, 2008
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Wouldn’t surprise me if they start making alternative versions of iPhones in China/for China. They’re probably tired of getting defrauded with people gutting components and then RMAing only to sell the parts or refurbing phones to resell.

Technically they do this already, every model sold in China is specific to mainland China or greater China.
 

PSCConMP

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Apr 26, 2015
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So we can then assume Apple will build an American supply chain for American phone sales. Not. One thing this does do is free Apple to use enslaved Uighurs without scrutiny. (I know Apple inspected one tier-1 supplier for slaves, but I didn't see they inspected any tier-2 suppliers. Please correct me if I missed something.)
 
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ruka.snow

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So we can then assume Apple will build an American supply chain for American phone sales. Not. One thing this does do is free Apple to use enslaved Uighurs without scrutiny. (I know Apple inspected one tier-1 supplier for slaves, but I didn't see they inspected any tier-2 suppliers. Please correct me if I missed something.)

It is not Apple's job to police the entire workforce of its suppliers but they do it anyway. And yes it would be good to have Apple devices produced in the USA for US customers and in the EU for EU customers(Make in the USA products would not be trusted in the EU due to all the NSA nonsense and a general distrust of an aggressive foreign nation in much the same way US customers are distrusting on Chinese imports).
 
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ian87w

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I was reading an article with dragging to Samsung. Even though Samsung might have pullout all their manufacturing out side of China, near 30-40% of parts are still comes from China.

This is the reality, China has the most sophisticated supply chain in the world, it is kind hard for company to skip all Chinese supply chain all together.
Agree that it's hard, but recent events have shown companies to have options.
 

genovelle

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May 8, 2008
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So we can then assume Apple will build an American supply chain for American phone sales. Not. One thing this does do is free Apple to use enslaved Uighurs without scrutiny. (I know Apple inspected one tier-1 supplier for slaves, but I didn't see they inspected any tier-2 suppliers. Please correct me if I missed something.)
Notice the reason in the article, to lower supply cost in China to make the more competitive. As we isolate China we loose the ability to use their cheap labor to accelerate or economy by focusing the more profitable parts of the markets. They can produce more for less because they have 4 times the number of people available to work.
This can unfortunately back fire if India can take up the slack and more has to be done in the US. Our prices will rise while they will decrease in China. The same parts will cost 3-4 times as much to build here because labor is much higher. That means cost would increase significantly. The economic advantage we had would be erased. I’m not sure why this simple fact is not acknowledged more often.
 

Aoligei

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Jul 16, 2020
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So we can then assume Apple will build an American supply chain for American phone sales. Not. One thing this does do is free Apple to use enslaved Uighurs without scrutiny. (I know Apple inspected one tier-1 supplier for slaves, but I didn't see they inspected any tier-2 suppliers. Please correct me if I missed something.)

People here seems think Apple can build a supply chain with snap of a finger.

It takes time, maybe a decades long to re-establish supply chain, that not count how expensive to setup companies, retooling, searching for qualified people etc.

Moral high ground or not. It makes no economical sense for any company relocating to United States.
 

Aoligei

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Jul 16, 2020
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Wouldn’t surprise me if they start making alternative versions of iPhones in China/for China. They’re probably tired of getting defrauded with people gutting components and then RMAing only to sell the parts or refurbing phones to resell.

Foxconn has done this for long time. Foxconn has been selling factory sealed iPhone (phone only without accessories) using excessive parts. I don’t think Apple never noticed this, it is more like Apple is consenting Foxconn, so there are cheaper iPhones available.

You can search so called 1978 iPhone, where activation date showing on those particular iPhone is 1987-04-01.

Apple has been tolerating this kind behavior for so long, I don’t think they would just build China only version to counter refurbished iPhone
 
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