Apple strengthens ties with China despite adjustments in supply chain operations
In a significant shift, the number of Apple suppliers operating in Vietnam surged by 40% to 35 in 2023, as the tech giant continues to diversify its supply chain. This expansion comes alongside a growing presence in China, where Apple's revenue from the Greater China region accounted for 17% of its total revenue in the December quarter of an unspecified year.
China, with its complete supply chain for laptop computers and smartphones, has been the largest camp of Apple suppliers since 2020. IDC tech analyst Annabelle Hsu highlighted this fact, stating that China still holds the world's most complete supply chain for these devices.
Vietnam and Thailand have emerged as popular destinations for tech companies and their suppliers. However, Vietnam faces electricity and labor constraints, a concern that Apple is addressing by increasing spending on suppliers in the country. Vietnam is also being considered as a potential manufacturing location, alongside Indonesia.
San'an Optoelectronics, Baoji Titanium Industry, and Jiuquan Iron & Steel entered the list of top Apple suppliers for the first time in 2023, reflecting the company's ongoing efforts to diversify its supply chain.
Apple's commitment to long-term cooperation in China is evident, with the company increasing its China-headquartered suppliers and Chinese manufacturing sites in 2023. During his visit to China in March 2023, Tim Cook emphasized this commitment, engaging in cooperative discussions with local businesses and officials to strengthen Apple's presence and supply chain in the Chinese market.
In a surprising turn of events, Huawei's shipments in China's first quarter of 2024 jumped 69.7% from a year earlier, while Apple's plunged 19.1%. This could potentially put pressure on Apple in the Chinese market, especially with Huawei's introduction of its latest flagship Pura 70 series.
India, another significant market for electronics makers, is yet to see a ramp-up in investment. The number of Apple suppliers in India remained at 14 in 2023, with local conglomerate Tata Group entering the list of top suppliers.
Meanwhile, the number of Apple suppliers in Thailand grew by about a third to 24 in 2023. Around 84% of Apple's top 187 suppliers had facilities in China in 2023, and about 37% of the 35 suppliers in Vietnam are from China and Hong Kong.
To further strengthen its position, Apple will invest more than USD 250 million in its Singapore campus to support growth in artificial intelligence and other key functions. Cook also announced the expansion of Apple's R&D center in Shanghai during his visit to China in March 2024.
During this visit, Cook met with key suppliers like iPad assembler BYD and glass materials maker Lens Technology, and high-ranking Chinese officials, reaffirming Apple's commitment to its partnerships and growth in the region.
In conclusion, Apple's strategy of expanding its presence in Asia, particularly in China and Vietnam, is a strategic move to diversify its supply chain and strengthen its position in key markets. However, competition remains fierce, as evidenced by Huawei's resurgence in the Chinese market. The tech giant will need to continue its efforts to maintain its market leadership.
