I'm interested to know to what extent this is just assembly of parts imported from China, or whether the real control over things like the M1 chip assembly, secure element, logic board, etc. are also moved to Vietnam? Seems like that's the secret sauce / real proprietary stuff that tells you whether the high value is moving too. (or maybe that is not even in China either)
And do they have the surrounding parts + engineering ecosystems that is so touted as why China is the place to get things built?
As state before, China is already assembling lots of parts from other Asian countries. Additionally, iPhones are made in special export zones (SEZs), so the parts along with the machinery used to produce an iPhone are all imported without tariff (and even the company doing this is Taiwanese, which embodies a lot of the higher level hardware/production engineering that easily transfers to Vietnam). Consequently, iPhones have to be re-imported into China before they can be sold to Chinese consumers, incurring tariffs at that point. I assume Vietnam has something similar set up.
China is the one assembling parts imported from abroad or other parts also assembled there. As far as I know no high value parts are actually made in China, though I’m sure some sub components could also be assembled there.
I wonder how long it will be until Apple is running their own fabs, or at least diversifies away from heavily relying on TSMC. Has anyone seen news to this effect?
A convergence of many reasons, including the uncertainty caused by locking down entire cities.
TBH its likely that it was a question of when not if this would happen. Will be interesting to see the geopolitical effects of a diversification of manufacturing capabilities. CCP wouldn’t be able to sustain the current export focused model.
this is rather to limit economic exposure to a war that the US is planning. as now the US war against Russia in the proxy war in Ukraine, Europe and especially Germany will be the main victim.
The US foreign politics is the main evil in the world and the EU is still following the Americans. It is incredible.
We must get rid of all American influence in Europe, ban US tech, ban US military, get rid of the US propaganda, brands, social media.
Still a Chinese manufacturer… (Luxshare Precision Industry)
If it had been a non-chinese company, it would have been a great move. Western companies will need to reduce their reliance on China in their supply chains.
A lot of comments here are criticizing Apple for chasing cheap labor.
Ignoring for a second the fact that this has a lot more to do with geopolitics and hedging geopolitical risk, I think it's important to think more carefully about the impact of companies investing in developing economies.
By and large, the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development. It would be better if the factories were more often owned domestically (instead of owned by Chinese companies), but the actual workers are not suffering in the short term as a result of Apple bringing jobs. The complete opposite is true.
There is a lot of dishonesty around Westerners complaining about foreign cheap labor.
They claim to be championing labor rights, but they are often just angered at companies for stopping all manufacturing in the West. They see it as an obvious weakness in their ideology that companies can just walk away from their labor movement and go elsewhere.
The obvious truth, and what literally all of these Vietnamese workers will tell you, is that foreign tech manufacturing is an amazingly better paying job than what is currently available.
The true story with China is that moving Western manufacturing to China raised the standard of living for literally hundreds of millions of Chinese people out of poverty.
China was literally able to lift hundreds of millions of people out of poverty with all the manufacturing that was moved there. I think most people don't understand anything about economics. Vietnam absolutely wants and will benefit from an increasingly industrialized economy.
edit: I'm seeing a number of comments pointing out how these are companies owned by Koreans. Which maybe isn't optimal, but the potential for knowledge transfer coupled with investment in infrastructure and logistics chains is a great opportunity that just needs to be used well.
I think many of us would be more supportive of outsourcing manufacturing to developing countries if their government aligned more with Western ideals. The fact is many countries, like Vietnam, are still "developing" because they have authoritarian governments that have been oppressing their population to some extent keeping their labor cheap while stunting their economic potential.
We see the problems with this situation right now with Russia and China, whether it's buying oil from Russia or manufacturing in China, we've given these countries enormous amounts of power and influence by essentially funding their regimes. As we can see with the situation in Ukraine and Taiwan these regimes are not our friends or allies, even though we have allowed ourselves to become attached at the hip to them economically. As a western consumer I would much rather see my money either stay in country or go to a country that is a political ally and shares more western political and economic ideals.
If anything, the decline in needing cheap labor is going to be a problem for large countries like China. China needed those cheap labor factories to be the engine to help lift people out of rural poverty.
Unfortunately that engine will now falter and many will be left behind.
For an eye opening survey here, I highly recommend the book Invisible China.
Is cheap labor the driving factor, though? I vaguely recall that the labor cost alone in China has not been the largest competitive advantage as the cost has been increasing steadily over years. Instead, it was the complete supply chain in China that out competes other countries.
Bloomberg also reported an incident: Jobs wanted to change the cheap plastic screen to glass, and Foxconn was able to recruit more than 8000 workers overnight and completely reconfigured their assembly line to fulfill such request. This level of efficiency used to belong to the US. I really hope US can revolutionize its manufacturing for this century.
I read similar things about new factories in Norway like 150 years ago. From our look it was terrible with 11 hours shifts, no vacations, child labor etc. But at that time people who worked there actually preferred that since the alternative was even harder work on farms or in fishery.
>the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development
Wait, I think people were much happier and we should go back to an agrarian society and that people are miserable in the dystopia we created, so I need a citation for this.
The interesting thing about the geopolitical context is that Vietnam is also single party Communist country now practicing state capitalism and also has all the trappings of communism such as internment of dissidents, same as China does
But our willingness to never think about it comes from Vietnam’s irrelevance, not the system they practice
Capitalism is one of the biggest eradicators of poverty. 1B of people in China was lifted from poverty because of it. And once it's done with one poor country, it starts taking care of the others :)
Can't shake the feeling that a similar rationality was used to partially justify trading slaves "The new master feeds them bread and milk instead of just rice and water! Its a clear win for them!". Yeah I get it, its an improvement for sure but maybe the problem has roots a bit deeper that must be adressed and therefore righfully critized despite being an improvement.
> By and large, the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development.
Do you have numbers on how it improved life of Chinese farmers compared to 100 years ago, 200?
When the US went through its industrial revolution we went from people owning farms to basically being owned by the factories boss. Child labor was rampant so we’re ridiculous working hours and blacksmiths and others who were put out of a job basically drank themselves to death.
Someone none of that seems to ever happen in other countries and all we hear about is “how great of an opportunity it is for them to get to build iPhones” odd stuff
Good for Vietnam. I visited the country in 2016 and fell in love with it, going back two more times. I’ve never seen a more hardworking, yet friendly people. They deserve all the success in the world.
Lots of manufacturing has been moving to Vietnam (and similar countries) as China is finally running out of low cost labour. This has been happening for at least a few years, more likely a decade I think
How is no one mentioning that China is threatening Taiwan. If the US ends up in a war with China, suddenly most Apple products would have serious operations problems if not being shut off completely. Cheap labor isn't a bad reason, but this is also a hedge against the heating politics between the West and both Russia and China.
Also based on recent analysis many countries e.g. China, South Korea have increased exports to Russia including dual use technologies which are prohibited under recent sanctions.
This combined with upcoming war games involving China and Russia shows clearly where their allegiances lie.
So the risk of China being economically punished is not insignificant and Apple is very likely to be caught in the cross-fire if it does happen.
At some point we should outsource our armies and perhaps even governments. If a real war starts we can use the services industry, unless we outsource that too. We’ll send the lawyers and software engineers in, and power our cardboard tanks with wood and steam.
I was hoping the pandemic and the war in europe would teach us that electronics, particularly high end, should be relocated to allied countries at the very least.
[+] [-] pedalpete|3 years ago|reply
[+] [-] supernova87a|3 years ago|reply
And do they have the surrounding parts + engineering ecosystems that is so touted as why China is the place to get things built?
[+] [-] seanmcdirmid|3 years ago|reply
[+] [-] dirtyid|3 years ago|reply
Ctrl+F 157 from PRC, other countries rarely break 30.
Vietnam has 21 suppliers, most of whom also has (likely primary) PRC operation.
>engineering ecosystems
One presumes still need PRC to to build things first and work out kinks - so far only matured manufacturing lines are shifting out of PRC.
[+] [-] wmf|3 years ago|reply
[+] [-] chrischen|3 years ago|reply
[+] [-] rednerrus|3 years ago|reply
[+] [-] pishpash|3 years ago|reply
[+] [-] iloveitaly|3 years ago|reply
[+] [-] dijonman2|3 years ago|reply
Makes sense to move manufacturing capabilities there, they are a step ahead. Perhaps it will result in vulnerabilities being closed.
[+] [-] jakuboboza|3 years ago|reply
[+] [-] pm90|3 years ago|reply
TBH its likely that it was a question of when not if this would happen. Will be interesting to see the geopolitical effects of a diversification of manufacturing capabilities. CCP wouldn’t be able to sustain the current export focused model.
[+] [-] 88840-8855|3 years ago|reply
The US foreign politics is the main evil in the world and the EU is still following the Americans. It is incredible.
We must get rid of all American influence in Europe, ban US tech, ban US military, get rid of the US propaganda, brands, social media.
[+] [-] sandstrom|3 years ago|reply
If it had been a non-chinese company, it would have been a great move. Western companies will need to reduce their reliance on China in their supply chains.
[+] [-] azlev|3 years ago|reply
[+] [-] kube-system|3 years ago|reply
[+] [-] iambateman|3 years ago|reply
[+] [-] coffee_beqn|3 years ago|reply
[+] [-] mgraczyk|3 years ago|reply
Ignoring for a second the fact that this has a lot more to do with geopolitics and hedging geopolitical risk, I think it's important to think more carefully about the impact of companies investing in developing economies.
By and large, the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development. It would be better if the factories were more often owned domestically (instead of owned by Chinese companies), but the actual workers are not suffering in the short term as a result of Apple bringing jobs. The complete opposite is true.
[+] [-] koheripbal|3 years ago|reply
They claim to be championing labor rights, but they are often just angered at companies for stopping all manufacturing in the West. They see it as an obvious weakness in their ideology that companies can just walk away from their labor movement and go elsewhere.
The obvious truth, and what literally all of these Vietnamese workers will tell you, is that foreign tech manufacturing is an amazingly better paying job than what is currently available.
The true story with China is that moving Western manufacturing to China raised the standard of living for literally hundreds of millions of Chinese people out of poverty.
[+] [-] Sakos|3 years ago|reply
edit: I'm seeing a number of comments pointing out how these are companies owned by Koreans. Which maybe isn't optimal, but the potential for knowledge transfer coupled with investment in infrastructure and logistics chains is a great opportunity that just needs to be used well.
[+] [-] fiftyfifty|3 years ago|reply
We see the problems with this situation right now with Russia and China, whether it's buying oil from Russia or manufacturing in China, we've given these countries enormous amounts of power and influence by essentially funding their regimes. As we can see with the situation in Ukraine and Taiwan these regimes are not our friends or allies, even though we have allowed ourselves to become attached at the hip to them economically. As a western consumer I would much rather see my money either stay in country or go to a country that is a political ally and shares more western political and economic ideals.
[+] [-] eej71|3 years ago|reply
Unfortunately that engine will now falter and many will be left behind.
For an eye opening survey here, I highly recommend the book Invisible China.
[+] [-] hintymad|3 years ago|reply
Bloomberg also reported an incident: Jobs wanted to change the cheap plastic screen to glass, and Foxconn was able to recruit more than 8000 workers overnight and completely reconfigured their assembly line to fulfill such request. This level of efficiency used to belong to the US. I really hope US can revolutionize its manufacturing for this century.
[+] [-] _0w8t|3 years ago|reply
[+] [-] JohnJamesRambo|3 years ago|reply
Wait, I think people were much happier and we should go back to an agrarian society and that people are miserable in the dystopia we created, so I need a citation for this.
[+] [-] latchkey|3 years ago|reply
[+] [-] yieldcrv|3 years ago|reply
But our willingness to never think about it comes from Vietnam’s irrelevance, not the system they practice
[+] [-] tasubotadas|3 years ago|reply
[+] [-] mattigames|3 years ago|reply
[+] [-] devoutsalsa|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] marricks|3 years ago|reply
Do you have numbers on how it improved life of Chinese farmers compared to 100 years ago, 200?
When the US went through its industrial revolution we went from people owning farms to basically being owned by the factories boss. Child labor was rampant so we’re ridiculous working hours and blacksmiths and others who were put out of a job basically drank themselves to death.
Someone none of that seems to ever happen in other countries and all we hear about is “how great of an opportunity it is for them to get to build iPhones” odd stuff
[+] [-] spaceman_2020|3 years ago|reply
[+] [-] tim333|3 years ago|reply
was cool and reminded me of the guys who fixed my scooter in Vietnam for about 30p a time.
[+] [-] LatteLazy|3 years ago|reply
https://carnegieendowment.org/2020/06/18/is-vietnam-eating-i...
[+] [-] ArrayBoundCheck|3 years ago|reply
[+] [-] stereoradonc|3 years ago|reply
[+] [-] thankful69|3 years ago|reply
[+] [-] Lapsa|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] unknown|3 years ago|reply
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[+] [-] ngcc_hk|3 years ago|reply
[+] [-] syngrog66|3 years ago|reply
[+] [-] gleenn|3 years ago|reply
[+] [-] cyberpunk|3 years ago|reply
[+] [-] threeseed|3 years ago|reply
This combined with upcoming war games involving China and Russia shows clearly where their allegiances lie.
So the risk of China being economically punished is not insignificant and Apple is very likely to be caught in the cross-fire if it does happen.
[+] [-] scarface74|3 years ago|reply
[+] [-] spaceman_2020|3 years ago|reply
[+] [-] yrgulation|3 years ago|reply
I was hoping the pandemic and the war in europe would teach us that electronics, particularly high end, should be relocated to allied countries at the very least.