China's Apple loss is India's gain, as 2022 supplier list shows shift in supply chain preferences

Apple added five new mainland Chinese suppliers while removing eight in mainland China in its latest financial year ended September 2022, after China's strict Covid-19 controls disrupted iPhone production last holiday season, according to the latest supplier list published by the US consumer electronics giant.

Globally, Apple added 18 new suppliers while cutting 19, resulting in a small adjustment in its supply chain, but one that has made India a clear winner. The number of Apple production sites in the country increased to 14 last year compared with 11 in 2021, signalling the iPhone maker's accelerated expansion in the country. It also opened its first two retail outlets in India this year.

In China, the five new suppliers include metal processing companies Cathay Tat Ming and Bichamp Cutting Technology, as well as Zhuhai CosMX Battery. Sunny Optical Technology, which was the largest supplier of high-end wide-angle lenses for the iPhone 14 series of smartphones last year, was also included.

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Among the eight companies removed from the list are Trio Metal Company Limited, a supplier of wire rods based in southern Guangzhou, and display maker Tianma Micro-Electronics. Shenzhen-based Zhenghe Group, which processes and assembles metal and plastic exterior chassis, was also cut.

Apple's latest supplier list, which was published last week, accounts for 98 per cent of the company's direct spending on materials, manufacturing and assembly worldwide. The tech giant's supply chain is closely watched, as changes are seen as a sign of China's shifting role in global manufacturing.

The bulk of Apple's manufacturing remains in China, where 151 of its top 188 disclosed suppliers have facilities, compared with 150 in 2021. However, rising labour costs combined with geopolitical tensions with the US and three years of Covid restrictions that just ended this year have pushed foreign businesses to relocate more production to other countries in the region, particularly India and Vietnam.

Last November, Covid-related protests broke out at the largest iPhone production facility in the world in Zhengzhou. It resulted in shipment delays for iPhone 14 models during the Christmas holiday shopping season.

Apple has also been diversifying its iPhone manufacturing, having become wary of an over-reliance on Taiwan's Foxconn Technology, its largest supplier. Shenzhen-based Luxshare and Taiwanese Pegatron both received orders to make the upcoming iPhone 15 series phones, including premium models, marking the first time Apple has tapped three suppliers to produce its most high-end smartphones, according to the Taiwanese newspaper Economic Daily News, citing sources close to the Apple supply chain.

"Apple should strive to achieve supply chain balance rather than reducing or increasing [suppliers from any region] specifically," said Eddie Han, a senior analyst at Isaiah Research. "Balancing [its supply chain] would be most beneficial for Apple."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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