According to the Nikkei news on June 1, apple transferred part of iPad production from China to Vietnam for the first time. This is another assembly product undertaken by Apple's Vietnam factory after airpods. In the past two years, the epidemic has caused a serious impact on the global electronics industry, and Apple's demand for dispersing supply chain risks is growing.
Review the development history of apple supply chain
In the 1970s, with the stagnation of American economy, the high-tech industry began to transfer labor-intensive production to Japan, South Korea and Taiwan, and the electronic product OEM industry rose.
In the 1980s, Dell, Hewlett Packard and other brands have successively chosen to transfer production to Southeast Asia to reduce manufacturing costs, but jobs still wants to complete the production of Apple computers in his own country and build new factories in California, Colorado and Texas. However, it is far from smooth as expected.
The apple computer factory in California was once jobs' pride. The factory was highly automated, and the labor cost accounted for only 2% of the manufacturing cost. However, with jobs leaving apple in 1985, the local manufacturing plants in the United States were closed one after another.
By the time cook took office in 1997, Apple had opened a new supply chain layout. In addition to product design and retail, the IT systems of the company's parts suppliers, assembly plants, logistics, etc. all over the world are connected to the company's "heavenly eye" system to detect the operation of the supply chain and order inventory at any time.
New supplier introduction
At the same time, Hon Hai Precision is also becoming an important manufacturer in the electronics manufacturing industry. In 1985, Hon Hai Precision established Foxconn, opening the road to the kingdom of OEM. Since 1988, it has built production bases in Kunshan, Shenzhen and Suzhou. In 2000, Hon Hai began to produce imac , followed by mac mini, iphone And ipad Foxconn has also taken over the contract.
A very important factor in Apple's transfer of product production to China is that at that time, the design team used aluminum for the first time, while American suppliers did not provide satisfactory shell samples, but Foxconn met Apple's product specifications.
In addition, China is a major aluminum supplier, accounting for nearly 60% of the global aluminum materials. Production in China can significantly reduce the transportation cost of raw materials.
Before the iPhone 5, both the iPhone and iPad were manufactured by Foxconn. Since 2013, Apple has introduced Heshuo to start producing a small number of iPhone 5 in Shanghai. Since then, it has successively produced iPhone 5S, iPhone 6 and ipad Mini.
Since then, China has become Apple's most important production base.
The sales of each new generation of Apple products were very hot. At that time, the iPhone 6 surpassed Samsung and became the mobile phone with the highest shipment volume in the world. With Apple's hot sales, the number of orders is increasing. When it comes to the iPhone 6S, apple is considering introducing new suppliers again, including Wistron group and Compal communications.
Subsequently, Wistron built a production line in Jiangsu to manufacture iPhones. By 2020, Weichuang investment (Jiangsu) Co., Ltd. and Weixin Zitong (Kunshan) Co., Ltd. will be acquired by Tencent precision, which will enable Tencent to obtain the production order of iphone13 later.
Apple has been optimizing its supply chain to prevent over reliance on a single supply channel, which is what cook is best at. Before joining apple, he was responsible for global material procurement and product inventory management of Compaq.
Apple's supply chain is temporarily inseparable from China
As Foxconn and hushuo began to assemble Apple products in China, a large number of parts and raw materials were needed. Apple industry chain in China also began to develop rapidly, including display panels, semiconductor devices, camera modules, functional devices, passive components, etc.
98% of Apple's parts and materials come from the company's TOP200 supplier list. Among the 200 suppliers, there are 98 Chinese manufacturers, focusing on precision components and material supply modules. The number of enterprises in the United States, Japan and South Korea followed closely. This shows that the importance of China's parts supply chain to apple is difficult for other countries to surpass.
In recent years, the number of Companies in Southeast Asia in the list of parts suppliers has also gradually increased, including Vietnam, India and other countries. However, the number of suppliers and the integrity of the industrial chain are far behind that of China.
In a region, the integrity of the product supply chain can greatly affect the cost of products, including raw material procurement costs, transportation costs, etc., so the product assembly plant will not be far away from the production location of the parts supplier as far as possible, which determines the importance and irreplaceable nature of China's apple industry chain.
Previously, trump once wanted apple to transfer its production line back to the United States to stimulate the development of local manufacturing industry. In 2018, he also personally attended the commencement ceremony of Foxconn's US factory. However, the factory was faced with the dilemma of not recruiting people and needing to dispatch engineers from China. Apple executives have said that it takes about 8700 industrial engineers to manufacture the 200000 assembly line for Apple mobile phones. It takes about nine months to find these qualified engineers in the United States, but only 15 days in China. It is conceivable that Apple will ultimately rely on Chinese manufacturers to produce.
Transfer to Southeast Asia is an inevitable path
However, with the rapid development of China's economy, labor costs have risen rapidly. For the labor-intensive manufacturing industry, labor accounts for a large proportion of the cost, and the increase of labor cost will greatly increase the production cost of products.
Therefore, technology giants have also shifted their attention to countries and regions with low labor prices, including India and Vietnam. Apple's OEM plants, including Foxconn, Heshuo and Wistron, have begun to build factories in India and other places to advance the layout of future production line transfer.
It is difficult to reverse the trend that Southeast Asia, with its large population and low labor price, has become an important production area of the electronics industry.
In 2021, Apple has begun to produce iphonese in India; In April this year, Foxconn began to produce iphone13 at a factory near Chennai, India.
Recently, Vietnam will also start to produce iPad, which is an apple product undertaken by Vietnam factory after airpods 3.
In addition to obtaining the support and a large amount of funds from the local government, it is more important to have experienced technicians to develop new production lines. However, the training of local employees in Vietnam requires a certain amount of time to gain experience. If a large number of overseas personnel are introduced, the cost will increase significantly.
In addition, most of the various parts required for iPad production are produced in China. If a large number of parts are transferred to Vietnam for assembly and production, the transportation cost of parts will rise significantly.
At present, India and Vietnam do not have the complex supply capacity of Apple product components. They can only be imported from China and transported to local assembly. Therefore, it is difficult to reduce the orders of China in a large number within a few years. Southeast Asia still needs more time to train a large number of professional engineers and strengthen the development of local parts manufacturers.
In addition, the suppliers of China's fruit chain also began to try to transform, gradually reducing their dependence on Apple orders, in order to seek industrial upgrading and transformation.