Apple Continues to Add Suppliers in China

China remains a dominant supplier in Apple’s supply chain, despite a decline in iPhone sales in China, and political tensions between China and the U.S.

Apple has added eight new Chinese suppliers. Although the company has stated it intends to diversify its supplier base and production across Asia, especially India, Apple has yet to find enough companies outside China that meet Apple’s quality, infrastructure, and workforce standards.

Video Spotlight:  

This post is based on the Mac Observer article, Apple Adds 8 Suppliers in China; Why? 50% India-Made iPhones “Not Good Enough”, by Devesh Beri, April 23, 2024, and the YouTube videos in the Spotlight. Image source: Hanna Kuprevich/Alamy Stock Photo

Discussion Questions:

1. Comment on the role of China in Apple’s supply chain.

Guidance: China plays a dominant role in Apple’s global supply chain, with over a third of Apple’s suppliers having factories in mainland China.  The addition of eight new Chinese suppliers increases China’s dominance in the company’s supply chain.

2. Explain why it makes sense for Apple to expand its supply chain network outside China.

Guidance: Weak performance during the COVID pandemic, and increased political risk in China, are the main reasons for Apple to expand outside China.

iPhone sales dropped 19% during the pandemic and continue to decline.  Retaliating against US restrictions on Chinese apps, Chinese companies and government agencies have limited the use of Apple devices among their employees.

The current business environment presents threats for Apple to do business in China.

3. Explain why it is difficult for Apple to diversify its supplier and production base outside China.

Guidance: Apple has strict quality standards, infrastructure specifications, and workforce skill requirements that few companies outside of China have been able to match at this time.

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