Apple’s Plan To Rely On China For iPhones Totally Backfired
Despite recent efforts by Apple to reduce its reliance on China, Chinese engineers and suppliers will remain a critically important asset for the development of new iPhones in the near future.
Apple is developing plans to increase production of both iPhones and iPad tablets in India as tensions mount between the U.S. and China, according to Reuters. However, Chinese suppliers will still account for a significant portion of parts used in Indian assembly pants, and Chinese engineers will still be central to the design process of new Apple devices, The New York Times reported.
While Apple used to frequently send developers from California to lead meetings in China about production and assembly processes for iPhones, workers have been unwilling to travel to China following the coronavirus pandemic, turning down stipends of up to $50,000 meant to incentivize travel, the NYT reported. Filling the void left by American engineers, Chinese staff now have the authority to select suppliers for parts and lead meetings about the design process, responsibilities once reserved for their American counterparts, according to the NYT.
As Chinese engineers become more important to the design process, Apple has posted 50% more jobs in China in 2022, with four months remaining, than in all of 2020, the NYT reported. These new hires are typically Western-educated Chinese citizens, the NYT reported, citing anonymous apple employees.
Beside the iPhone and iPad, Apple is currently in talks with suppliers to produce its Apple Watch and MacBook laptop in Vietnam, according to Nikkei. Should the company go through with the decision, it would be the first time either product was assembled outside China.
At the same time, Chinese suppliers have become increasingly more important to producing iPhones, according to a study by the National Graduate Institute for Policy Studies (GRIPS), an elite research institution funded by the Japanese government.
“Chinese companies involved in the value chain of the iPhone have climbed to the upper rungs of the ladder,” the GRIPS study states. “Even companies that started as simple assemblers have not been trapped in low value added tasks.”
In 2009, only one Chinese firm was closely related to manufacturing iPhones, accounting for only 3.6% of the cost of production, according to the GRIPS study. In 2018, eleven firms were closely related to iPhone manufacturing, accounting for 25.4% of the cost of production, the GRIPS study found.
While the lone Chinese supplier was responsible solely for assembly in 2009, Chinese firms have since been responsible for a variety of important high-tech components ranging from 3D sensing modules, wireless charging modules, circuit boards, speakers, and camera modules, according to the GRIPS study.
“In terms of gross value, one iPhone X imported by the US results in a $332.75 trade deficit for the US,” the GRIPS study reads. “Under current trade statistics practice, the iPhone remains a significant source of statistical distortion in calculations of the Sino-US bilateral trade imbalance.”
Apple did not respond to a request for comment from the Daily Caller News Foundation.
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