Apple Has Added More Suppliers In China Than Anywhere Else, Sidelining Political Concerns: SCMP

Apple Inc AAPL bet on Chinese suppliers even as the relationship between the United States and China deteriorated and economic decoupling between the two countries was discussed, the South China Morning Post reported Tuesday.

What Happened: The Hong Kong-based SCMP went through Apple’s list of suppliers in the 2017-2020 time frame and concluded that one-third of the shortlisted companies were from mainland China.

Among the 52 companies on the latest Apple supplier list, 15 are from the mainland with multiple firms based in Shenzhen and others based in eastern Jiangsu province, as per SCMP.

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Mainland names reportedly include Shenzhen-based Everwin Precision Technology, Tianma Microelectronics Co, and Nanping Aluminium.

Suppliers based in the U.S. and Taiwan took second and third place respectively in the list with seven companies each shortlisted. 

Why It Matters: “China’s mature manufacturing industry still has its attractiveness despite the US-China tensions,” said Will Wong, an analyst at Singapore-based IDC, SCMP reported.

See Also: Apple, Tesla Earnings Reports Show An Increasing Reliance On China As A Market

Wong said that this should not be construed as Apple shying from diversifying its supply chain and production.

The list does not indicate the monetary value of third-party services. Mainland Chinese suppliers generally offer lower value-added manufacturing and materials, while those based in the U.S. and Taiwan provide advanced components and semiconductors, noted SCMP.

Apple’s U.S. suppliers span 3M Co MMM, Intel Corporation INTC, and Skyworks Solutions Inc SWKS.

The iPhone maker is trying to diversify production to India and Vietnam in an effort to shed reliance on Chinese manufacturing.

However, the Tim Cook-led company’s efforts to diversify its supply chain have been stymied recently as India grapples with a deadly second wave of COVID-19. 

Apple suppliers Foxconn, better known as Hon Hai Precision Industry Co. Ltd HNHPF, and Wistron Corporation’s Indian operations were affected by the raging pandemic.
Price Action: On Tuesday, Apple shares closed nearly 0.3% lower at $124.28 in the regular session and gained almost 0.2% in the after-hours session.

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