Apple’s supplier list for fiscal 2023 (the period to 30 September 2023) showed China remained a critical nation for the vendor for more than just smartphone shipments and sales.
The details released by the company earlier this week revealed China continued to dominate a supply chain which is still heavily reliant on Asia-Pacific as a whole, highlighting Apple’s efforts to increase the mix of companies based other nations have some way yet to go.
South China Morning Post noted Apple ended fiscal 2023 with 157 suppliers in mainland China, compared with 151 in the previous 12-month period, reporting this as the first such increase since fiscal 2021.
The newspaper also noted Indian giant Tata Group’s electronics division was added to Apple’s list, part of the US vendor’s efforts to diversify its supply chain, at least by encouraging its current partners to open factories in neighbouring nations.
Leading analysts told Mobile World Live Apple’s continued reliance on China may not necessarily be a bad thing, though noted it does throw up some potential conflicts given the nation’s ongoing fight against US attempts to restrict access to key technologies.
Branching out
GSMA Intelligence analyst Christina Patsioura noted on X the list shows that “decoupling is easier said than done” in terms of Apple’s attempts “to spread out production”.
Despite China’s continued dominance of Apple’s list, Canalys analyst Le Xuan Chiew said the vendor is making headway in terms of diversification.
Canalys estimates the number of iPhones produced in India in calendar 2023 stood at 25 million devices, “around 12 per cent” of its total volume and double the amount made in the nation in 2022.
“We believe this can increase up to 21 per cent by the end of 2025 and expand to higher-end models”.
The analyst noted Apple CEO Tim Cook visited southeast Asia last month, a sign of the company’s “keen interest in expanding its presence” in a region which “holds great potential” due to “growing consumer demand and increasing opportunities for manufacturing”.
“By investing in this region, Apple can tap into a large and rapidly expanding market while potentially diversifying its manufacturing base to mitigate risks associated with over-reliance on any single location”.
CCS Insight principal analyst and director for the Americas Leo Gebbie explained it should not be a great surprise China remained the main market for Apple’s production in the region.
The vendor “has invested vast quantities of time and money into improving manufacturing processes for its devices”, an approach which “was a key differentiator” in Apple’s strategy of “delivering premium devices at a global scale in an efficient manner”.
But Gebbie conceded the recent hike in geopolitical tensions between China and the US had put Apple in a tricky spot, prompting it to seek “ways to diversify its supply chain”.
Like Patsioura, though, he said the practice of shifting production is harder than the theory, with Apple’s “heavy investments within China” making it “difficult to disengage from the country”.
Gebbie noted the vendor is increasingly turning to India and Vietnam for alternatives, but said there are “question marks about the ability to support a supply chain of Apple’s scale”, in terms of a skilled workforce and the necessary infrastructure.
Shipments
Ryan Reith, programme VP of Worldwide Mobile Device Trackers with IDC, highlighted Chinese suppliers remain core even when production is moved to nations including India, Vietnam and Mexico, because the components themselves “are very much still produced in China”.
However, Reith emphasised “most OEMs in the smartphone space heavily depend on China for supply chain” and manufacturing, adding this should not be conflated with consumption, or sales of finished devices.
The analyst added IDC does not believe the recent headwinds hitting Apple’s market share in China “should be an overall concern” for the company, a comment suggesting this would not necessarily influence decisions around its reliance on suppliers in the nation.
The post Analysis: Apple faces challenges decoupling from China appeared first on Mobile World Live.
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