Apple Shifted To Chinese Suppliers To 'Cut Costs and Curry Favor With Beijing,' Report Finds (9to5mac.com) 68
According to a new report from The Information, Apple has increased its reliance on Chinese partners, both as a way of cutting costs as well as to "curry favor with Beijing." 9to5Mac reports: Today's report from The Information comes on the heels of a separate report from the publication earlier this month in which it described a so-called secret deal between Apple CEO Tim Cook and Chinese government officials. Through this deal, Apple reportedly committed to investing more than $275 billion in China over five years.
The report details that Foxconn, which is headquartered in Taiwan, is on the verge of being unseated as Apple's top supplier by Luxshare, which is headquartered in China: "Luxshare has the potential to unseat Foxconn as Apple's top supplier. The Chinese company already exceeds Foxconn's main publicly listed unit in terms of market capitalization, though Foxconn generated roughly $105 billion from Apple in 2020 -- more than 10 times Luxshare's haul. But in terms of valuation, Luxshare has also eclipsed major Apple contractors such as Quanta Computer, Pegatron and Wistron, all of which are headquartered in Taiwan. Foxconn has become increasingly concerned about Luxshare's meteoric rise, including its significantly higher net profit margin, going so far as to form a task force to study the company, Reuters previously reported."
The report explains that Apple's move to shift more of its business to Chinese companies is part of Tim Cook fulfilling his $275 billion pledge to the Chinese government: "In shifting more business to Chinese companies, Cook, the architect of Apple's supply chain in China, is fulfilling his pledge to Beijing to expand its domestic tech industry, which will help the country reduce its reliance on companies based outside the mainland, including Taiwan -- a country China considers a renegade region. A year after Cook signed the economic agreement with China, Luxshare became the first Chinese company to secure a final assembly contract for a major Apple product, the AirPods, ending the dominance of Taiwanese firms. Apple's moves also might win over more Chinese consumers, which at times have shunned Apple in favor of local brands like Huawei based on nationalism. Apple generates nearly 20% of its revenue from the country." The report goes on to mention that Apple helped Luxshare manufature AirPods in 2017. "The AirPods were Luxshare's first major assembly contract for Apple, catapulting the company into the upper echelons of Apple suppliers that handle, pack and ship finished goods," reports The Information.
The report details that Foxconn, which is headquartered in Taiwan, is on the verge of being unseated as Apple's top supplier by Luxshare, which is headquartered in China: "Luxshare has the potential to unseat Foxconn as Apple's top supplier. The Chinese company already exceeds Foxconn's main publicly listed unit in terms of market capitalization, though Foxconn generated roughly $105 billion from Apple in 2020 -- more than 10 times Luxshare's haul. But in terms of valuation, Luxshare has also eclipsed major Apple contractors such as Quanta Computer, Pegatron and Wistron, all of which are headquartered in Taiwan. Foxconn has become increasingly concerned about Luxshare's meteoric rise, including its significantly higher net profit margin, going so far as to form a task force to study the company, Reuters previously reported."
The report explains that Apple's move to shift more of its business to Chinese companies is part of Tim Cook fulfilling his $275 billion pledge to the Chinese government: "In shifting more business to Chinese companies, Cook, the architect of Apple's supply chain in China, is fulfilling his pledge to Beijing to expand its domestic tech industry, which will help the country reduce its reliance on companies based outside the mainland, including Taiwan -- a country China considers a renegade region. A year after Cook signed the economic agreement with China, Luxshare became the first Chinese company to secure a final assembly contract for a major Apple product, the AirPods, ending the dominance of Taiwanese firms. Apple's moves also might win over more Chinese consumers, which at times have shunned Apple in favor of local brands like Huawei based on nationalism. Apple generates nearly 20% of its revenue from the country." The report goes on to mention that Apple helped Luxshare manufature AirPods in 2017. "The AirPods were Luxshare's first major assembly contract for Apple, catapulting the company into the upper echelons of Apple suppliers that handle, pack and ship finished goods," reports The Information.
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Espressif on the other hand is moving towards their space and has some compelling offerings in embedded.
Re: Can't wait to see Xiaomi's M1 chip clone (Score:2)
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It's a totally custom design based on ARM architecture. AFAIK the silicon isn't actually made anywhere in China. It's possible they package it somewhere in China, but I think that if they wanted to replicate the design they'd be better off stealing the HDL source code directly from Apple. Given that will probably be very hard to do, their next best bet is to decap and reverse engineer one straight out of an iphone with a SEM and try to rebuild it. #Goodluckwiththat.
As cheap as possible. (Score:4, Insightful)
Companies exist to make money for their shareholders. Literally everything else is of secondary importance. (This is even explicitly spelled out in pretty much every IPO you'll ever see).
So Taiwan? China? Work conditions? Apple doesn't give a fuck if it makes them more money.
Companies will pretend to care about it, but if they can ignore it by paying a fine that's less than the profit they made, then they will.
Re:As cheap as possible. (Score:5, Insightful)
Companies exist to make money for their shareholders.
There's one specific person - Tim Cook - who has been playing "Apple is an American company" [apple.com] card. He's been doing that whilst knowing that both of his recent presidents and most of his elected representatives have had a strategy of reducing dependence on China. He's a US citizen and he's been undermining that strategy. All this "companies make profit" stuff is a clear cover for what is completely within his control to change.
There are plenty worse - Microsoft has been aiding oppression in China for years and CISCO helped build the great firewall whilst Chinese companies copied their software systems - but let's not try to pretend this wasn't a decision made by people who could have made alternative decisions.
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. He's a US citizen and he's been undermining that strategy.
I thought that was the point of being American?
The government isn't supposed to get in the way of you doing business.
If the government wants to stop him, they are quite capable of making laws to do it. Otherwise how is it any of their business?
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I thought that was the point of being American?
The government isn't supposed to get in the way of you doing business.
If the government wants to stop him, they are quite capable of making laws to do it. Otherwise how is it any of their business?
Can I just restate that clearly as I understand it. You thought that the point of being an American was that you should be able to do business in ways that undermine the country? You believe that Americans have no duty, moral or otherwise, to support their own country? You believe that Americans should value profit over their own nations safety, security and freedom?
There is a different point I could believe in. "Tim Cook should not be imprisoned under US law if he hasn't broken US law". However that poin
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The point of having a free country is that it's free. Yes.
I thought the point of having freedom was that you are free to do as you wish. And not have to ask for government permission to do business in foreign countries. If you are going to make America less free. Those kinds of companies will just more to more free places anyway.
The government should be focusing on getting Apple to pay taxes (and follow clear laws) rather than expecting them to follow 'some abstract strategy' of 'containing China'. That's
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The point of having a free country is that it's free. Yes.
Free is not absolute. My freedom to hit you imposes on your freedom go around freely without fear of being hit. Freedom includes the freedom to trade with China. It also includes the freedom for all other citizens to try to act against people who trade with China. People can shut Tim Cook. People can bring up his disloyalty to his country when discussing him. People can boycott Apple. Also people can demand changes to the law which, even without the actual change happening, can force apple to give up busi
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Thing is, Google decided not to operate in China. Their services are blocked by the firewall, and while most Chinese phones do run a variant of Android, it's doesn't have any Google stuff and all services are provided by Chinese companies.
They passed up vast profits by not going into China. Profits that Apple, and Microsoft and all the rest, decided they would take. Google did it on principal, they refused to censor their search engine and provide data from Android devices to the government.
Don't make excus
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Nah, Google did it to get US government contracts. Google search used to be available in China, but it was never particularly profitable for them. They'd been removing search results at the Chinese government's request to allow them to keep the service available. However, while Google was bidding on some US government contract, they made a big show of pushing back against the Chinese government. They basically said, "There's no Chinese law that requires us to block these search results, so we won't do i
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Don't make excuses for Apple. They know what they are doing, it was a decision to put profit first and morals second. They are CCP collaborators and enablers.
Agreed. I wanted to point out that behind "Apple" there are individuals who made decisions that made apple do that. There is both a collective and an individual guilt and the idea (in the OP) that the companies will ignore any fine less than their profits derives from the belief that the individuals will be able to blame the company. That needs to be challenged by identifying the individuals (at least Tim in this case) and by prosecuting them where they break laws.
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As profitable as possible is the real aim.
There are limits to how far Apple can go censorship and surveillance wise before the PR backlash becomes a problem, they are the privacy brand and they have to be careful maintaining that brand. If the CCP kicks Apple out because they won't sufficiently cooperate with censorship and surveillance, China's large market will give competition a leg up.
These investments gives China more skin in the Apple game and makes it much harder for the CCP to kick them out of the C
Re:As cheap as possible. (Score:4, Insightful)
Companies exist to make money for their shareholders. Literally everything else is of secondary importance. (This is even explicitly spelled out in pretty much every IPO you'll ever see).
This falls down when you realise Apple doesn't pay anything to the vast majority of its shareholders.
Also this is why we regulate industries, because they can't be trusted not to do the shittiest thing possible when it's more profitable.
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Decisions are based on what helps the bottom line best, with a little weight on how soon that help comes and lasts.
How is this news? Seems like this article is troll bait. Companies will do what they do.
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Isn't it the job of Governments, not Companies to maintain reasonable living/working conditions for Workers?
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Any law relies on the majority of the citizens who are supposed to abide by that law not to be arse wipes, because the ability to regulate each and every individual in the face of widespread violations just doesn't exist. If one company has child labor, treasonous dealings with enemy nations, and ignores the nominal minimum wage, employment laws and taxe
So glad Comrade Cook (Score:2)
Re: Fuck Apple (Score:1)
Which company will you buy your electronics from? Are you going to chose only those companies that use non-Chinese based components? I dare say that will be hard.
"increased its reliance on Chinese partners" (Score:5, Insightful)
or, in other words, increased its exposure to the whims of the CCP. This is dangerous as relations with China are becoming increasingly fraught (think: Hong Kong, Uighur muslims, ...) and Apple could find itself caught in the cross fire with little capacity to build its products elsewhere. Organisations should always have an eye on what could go wrong and protect themselves even if this reduces profits -- look what happened when the banks did not in 2008.
Re:"increased its reliance on Chinese partners" (Score:5, Insightful)
They've built huge solar plants there since at least 2015 (only got around to building a California one this year, in their supposed "home" place, and it's not anywhere near the same sized investment). They've built multiple R&D centres in China at the expense of any other country. They keep building iPhone's in China with companies like Foxconn even though public they declared they'd leave back in 2011 when they could find someone who could match their "values".
They've made so many investments in China and these companies that could have instead been investments in any other nation or company, while watching all the human right abuses and China's general actions.
Yes, they aren't alone, but they also keep trying to make the claims that they are better and stand against these issues every year, and yet every year, no changes aside from the usual cut and paste "we will continue to investigate our suppliers to make sure that they don't commit such abuse" while continuing to use the exact same suppliers year after year that keep being found to make these abuses.
They were able to make the excuse that they couldn't just switch quickly 11 years ago, but that excuse wears thin after 11+ years.
And yet, Apple will keep claiming to take the moral high ground, and people will keep defending them, and history will keep repeating.
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I would have expected exactly the opposite from Apple : reduce reliance on China, by shifting production to e.g. India.
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Even without considering moral aspects, I am very surprised that Apple puts itself in a position where it becomes even more dependant from another partner. In all the recent Apple history under Cook, they have always done the opposite (independence from Intel for processors, from Qualcomm in the future for radio chips, etc.).
I would have expected exactly the opposite from Apple : reduce reliance on China, by shifting production to e.g. India.
If I recall correctly, their attempts to make manufacturing independent from China ran into all sorts of supply chain problems as there were basic things like screws that they could only get in China. Moving outside of China would have made their products so costly that not even the Apple people would buy them.
I suspect one day Apple will get their manufacturing out of China, but by that time it will be 100% automated so it won't really matter that much.
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Uh, "Taiwan" _is_ China. It's the difference between the ROC and the PRC/CCP
There is one China, but it's not run by the CCP.
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I thought that the attacks on Huawei might have been the motivation that Apple needed to get out of China. There was a very real danger that China would have retaliated by destroying Apple.
I wonder if Apple has been lobbying for better treatment of Huawei, to protect itself.
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Re: "increased its reliance on Chinese partners" (Score:2)
Mmmmm curry flavor with China... (homer drool)
and china wanted an Muslim snitch app forced insta (Score:2)
and china wanted an Muslim snitch app forced installed on ios on fast will it be added? and even with $0 /year dev and 0% of any in app buys?
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look what happened when the banks did not in 2008.
Massive government aid for the "too big to fail" banks, huge bonuses for the executives and close to 14 years of free or close to free government money through quantitative easing and close to zero interest rates.
What was the downside for the banks?
Playing with fire (Score:2)
It is essentially a given that China is going to steal your IP and create its own versions. That's on top of the ghost shifts at factories where they crank out extra batches of units to be sold, or someone takes the units from batches that didn't pass QA and flogs them on Alibaba or eBay.
The US can't (Score:2, Insightful)
The US can't even make the tiny screws Apple uses at the needed volume,
let alone the machine tools to make the screws, or supply the required raw materials.
If there was a US company that could have any impact in that space, a bunch of
money guys would take it, strip it, and send the remains to China anyway.
We can barely produce toilet paper these days without production glitches
because our workforce as a whole is functionally illiterate, and proud of it.
The entire ship has sailed years ago and coverage of Ap
Re:The US can't (Score:5, Interesting)
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It is not just China vs the USA. There are other countries that could potentially compete with China in low cost production. For example, Viet Nam and India. The point is that if companies make a concerted effort to feed enough business to other countries, it can help those countries bootstrap their industrial base and maintain some competition for China. Wages and other costs go up every year in China, so eventually they will not be a low cost center anyway. This has happened over and over throughout history. But it would be smart and beneficial for the whole world to diversify production outside of China.
India is not as cheap as China. They're working on developing their enconomy so that it's not as reliant on being slave labour and having more educated labour.
But besides that, India, being a (mostly) liberal democracy, wont ban your products just because you don't kow tow to their petty demands (let alone demand you cover up the excesses of the corrupt regime). Whilst India isn't exactly a bastion of freedom... Compared to China the average Indian prisoner has more liberty and freedom.
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We can barely produce toilet paper these days without production glitches because our workforce as a whole is functionally illiterate, and proud of it.
.
You haven't got the slightest fucking idea what you are talking about. The US manufacturers more high-tech and heavy industry goods than China does. China makes consumer shit and components.
All you asshats do is repeat things you heard someone else say.
The toilet paper shortage wasn't because of production glitches.
#1. The whole country was in lock-down. People take shits at work, using commercial toilet-paper. Suddenly they were home all day. That alone could account for as much as a 30% spike in de
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The screws Apple uses are a proprietary design made specifically to discourage the repair of their devices and encourage consumers to buy new devices instead.
Otherwise they could buy normal screws in any quantity from any number of suppliers. What's laughable is how everyone in 'big tech' will vote for a candidate based on their stance on climate change policies. While all their old devices that can't be repaired heap up in landfills and China brings more coal plants online to power that screw factory to ma
Boycott Apple (Score:2)
I've been doing it since 1989 (when they stopped supporting my Apple IIGS).
You can too....
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Screw the IIGS amd their kowtowing to that newfangled 16 color palette. . The last true Apple was the Apple IIe. Anything running more than 1 Mhz is a traversy - it makes Rescue Raiders run too fast so I can't dodge the missiles.
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Screw the IIGS amd their kowtowing to that newfangled 16 color palette. . The last true Apple was the Apple IIe. Anything running more than 1 Mhz is a traversy - it makes Rescue Raiders run too fast so I can't dodge the missiles.
The Apple //c came after the //e and was mostly the same. So, I'd argue (using your criteria) that the //c was the last true Apple :)
Uh...Foxconn is also a Chinese Supplier (Score:1, Troll)
Foxconn is in Taiwan, which part of China - according to China and the U.S. and most of the rest of the world. It is also a Chinese supplier.
Re: Uh...Foxconn is also a Chinese Supplier (Score:3, Insightful)
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What is so difficult to understand here? Taiwan is a country with a democratically elected government where people have rights, while both is not the case in Mainland China.
Even Taiwan doesn't claim to be its own country.
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Foxconn is in Taiwan, which part of China - according to China and the U.S. and most of the rest of the world. It is also a Chinese supplier.
Taiwan is not China. You're a fucking shill..
Beijing must be getting nervous. They're putting you moles everywhere.
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What.
https://en.wikipedia.org/wiki/... [wikipedia.org]
Literally the first search result for "Taiwanese passport".
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Most countries on this planet including US recognize One China Policy so there is no doubt Taiwan is China. Both Hong Kong and Macau have their own currency and passport, they are also China.
If Taiwan was China, then we'd not be selling them weapons in spite of China's protests. Try again, shill.
Analogy (Score:2)
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Wasn't that the American plan until Germany declared war? It's not like America wanted to forgo profits by declaring war on Germany.
Also note how few companies were tried and convicted at Nuremberg.
Move to China Cook (Score:2)
Apple continues to colonize China (Score:1)
Guess we know the next company on the block list (Score:2)
Apple better get another supplier lined up.
Hardware based appeasement predictions for 2022 (Score:2)
Won't be long now until Apple hardware starts crashing when unapproved strings are detected in RAM "Tiananmen square", "Uyghur", "Taiwan" and "Winnie the pooh" = instant bomb icon.
Some weeks later a low level developer at Apple will speak out about how idiotic the scheme is resulting in Tim Cook issuing a profusely heart felt apology to the Chinese people in Mandarin.
Tarriff the fuck outta them. (Score:2)
Easy way to stop that.
Always check your sources (Score:2)
Um, in all this mudslinging, has anyone checked the bona fides of this "report", or who/what "The Information" is?
From what I can tell, that site, and this "Report", should be taken with a gigantic grain of salt.
The site looks like a pure "Clickbait" site, with all the journalistic integrity of Marjorie Taylor Greene's [house.gov].