Apple is doubling down on its involvement with China while expanding its production in Southeast Asia and India – a balancing act in response to political pressures and business requirements. Last year, Apple increased its number of China-based suppliers and manufacturing sites, reducing reliance on Taiwan (possibly due to this), the U.S., Japan, and South Korea, according to Nikkei Asia.
Chinese companies are now the largest group within Apple’s supplier network, growing from 48 in 2022 to 52 in the last year. Manufacturing or development facilities in China increased by 10 to 286. Apple suppliers in Vietnam grew by 40% to 35 last year, while the number in Thailand increased by about a third to 24. Suppliers in India are stable at 14.
Despite earlier conjecture that Apple would reduce its dependence on China due to growing geopolitical tensions and an embargo on Chinese conductor technology to the U.S., that does not seem to be the case. For example, approximately 37% of the 35 suppliers in Vietnam are from China and Hong Kong, including AirPods assemblers Luxshare and Goertek and iPad assembler BYD. All three increased their production capacity to serve Apple.
According to IDC data, Apple’s shipments in the first quarter of this year dropped nearly 10% globally, a steeper decline than Samsung and Xiaomi.
Reports are that Apple is offering its iPhone 15 series at steep discounts in China, implying softening demand. However, there is an expected relief rally at Apple, especially with the upcoming Worldwide Developer Conference (WWDC), which is expected to showcase new AI software features.
