China becomes largest supplier base for Apple, surpassing Taiwan

Apple released its 2021 report last week.

What you need to know

  • Apple released its Supplier Responsibility report for 2021 last week.
  • Analysis shows China has grown to be its largest manufacturing base, with 51 of the 200 companies listed based there.

Analysis of Apple's 2021 Supplier Responsibility report has revealed that China has surpassed Taiwan to become the company's largest manufacturing base.

From Nikkei Asia:

China now boasts more Apple suppliers than any other country, a sign that Washington's attempt to untangle U.S. and Chinese supply chains has had little impact on the world's most valuable tech company.

Of Apple's top 200 suppliers in 2020, 51 were based in China, including Hong Kong, according to a Nikkei Asia analysis of the Apple Supplier List released last week, up from 42 in 2018 and knocking Taiwan out of the top spot for the first time ever. Apple did not release data for 2019.

Chinese suppliers have also helped Apple build production capacity in other Asian countries as part of the company's strategy to diversify its supply chain.

As the report notes, Apple's disclosures do not cover procurement value and money spent with each company, so the analysis represents a geographical spread of suppliers rather than reflecting the economic value of any of the relationships.

One Apple supply chain manager told the outlet that "most Chinese suppliers have very similar approaches", offering "very low prices" that suppliers in other countries "find hard to imagine":

"They are willing to take low-margin businesses that other suppliers are reluctant to pick up. This way, they could gradually level up by working with Apple and can later bid for more business the next time."

The report notes China is also driving production beyond its shores, with companies like Luxshare Precision Industry and Goertek expanding into Vietnam, which grew from 14 companies on the list in 2018 to 21 this year.

Apple's heavy investment in China has drawn continued scrutiny from commenters, with concerns raised regarding reports of forced labor in the Xinjiang region of China, as well as the handling of customer data in the country. Apple states that in 2020 it conducted 1121 supplier assessments in 53 countries, finding no evidence of forced or involuntary labor, or child workers.

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