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Comment by phoehne | Hacker News Reader

If China did something crazy that required Russia level sanctions on China, Apple would be hard over a barrel. You could have an Apple with nothing to sell but their existing, current inventory. They should be spreading out some manufacturing to hedge risk.

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What phone company or computer company would be able to build their product without their Chinese supply chain?

Russia aimed to be sanctions proof by having a largely self-sufficient industry. China aims to be sanctions proof by being critical in all supply chains. The US aims to be sanction proof by controlling the sanctions regime.

China doesn't make that many critical parts for phones.

Excluding Taiwan - does China have a monopoly on anything important beside assembly for Apple?

Samsung would not be screwed.

Batteries?

It’s not about parts but raw materials. It’s far more expensive to import materials, make parts and assemble post import than assemble everything at source and then export it.

Literally the vast majority of the critical mineral supply chain that is needed as inputs for most modern electronics, EVs, etc. although the US gov is finally waking up and doing something about it.

https://www.whitehouse.gov/briefing-room/statements-releases...

>What phone company

Samsung, on a relatively large scale and assembly in Vietnam.

Sony, their scale has lot more to do with them being incapable to competing in smartphone market.

Samsung has huge memory manufacturing in China.

The Chinese supply chain barely existed, relatively speaking, 20 years ago. It can be rebuilt the same way it was built: piece by piece. That’s what’s happening. Whether it’s a good thing geopolitically remains to be seen but diversifying does seem smart for the Apple.

> It can be rebuilt the same way it was built: piece by piece.

Not exactly. A huge part of what happened in China and made its industrial revolution possible was demographic: a lot of young, rural population that could (thanks to mechanisation of farming) now go off to the mega-cities and work in factories.

In contrast, the Western world does not have many young people any more and especially not many willing to work for shit wages... we could technically rebuild our supply chains domestically, but we won't have the population to staff the factories and the automation experience to automate them. Not to mention that an awful lot of what was "outsourced" were extremely dirty and polluting processes - the Silicon Valley is at the top of the Superfund sites count for a reason. Bringing these processes back home will require a lot of investment to ensure environmental compliance, or it won't be possible at all under the current environmental legislation.

Does the US necessarily need to rebuild the supply chain in the U.S.? Don't they just want a less antagonistic government? Could be Ethiopia (okay maybe not anymore), Nigeria, etc.

It will be done in Mexico. They have the young demographics and over the past five years, more and more manufacturing has been moving because of high Chinese labor costs.

Maybe. I worry that the situation in Mexico will continue to devolve and it'll be an impossible security risk for a multinational to operate anything that could be stolen, held hostage, etc. by a cartel.

Is your username a reference to the book Daemon? One of my favorite

That demographic advantage was twenty years ago. Today China has a terrible demographic structure—more old people than young people and a fertility rate well below replacement level. The One Child policy worked too well. And yes, much of the Western world has the same problem, but two notable exceptions are the United States and Mexico. We'll end up there eventually, but we've got some time.

I don't think all manufacturing will come back to the US. Much of it will go to South-East Asia and India as we're seeing in the article. And a bunch will surely end up in Mexico, which has lots of young people and an obvious geographical advantage.

But regardless of where they go, Apple really, really has to get out of China as quickly as possible. There are a lot of cracks showing in the Chinese system, and things could fall apart there very quickly. The demographics alone are staggering - the Chinese population could fall by half in the next 30 years, and the effects will be felt long before then.

What do you classify as "old" ? In 2021, about 62.5 percent of the Chinese population was between 16 and 59 years old.

> That demographic advantage was twenty years ago. Today China has a terrible demographic structure—more old people than young people and a fertility rate well below replacement level.

Indeed, and because it has waned and the supply of young people dried up, companies are already moving to Vietnam, India and probably, once China fixes up the infrastructure as part of the New Belt Road program, Africa.

The pace of productivity increases in manufacturing is increasing faster than pace of increase in demand. This is similar to what was happing in agriculture around 1900-1930 or so when 90% of the country farmed. When/if manufacturing comes back it will be much more automated, it will be much less labor intensive.

> What phone company or computer company would be able to build their product without their Chinese supply chain?

https://puri.sm/products/librem-5-usa

I think that it is incredibly unlikely the world could stomach Russia level sanctions on China so there may be a more muted response more focused on getting companies to more rapidly unwind their supply chains from China. Also, in the meantime there may be more proactive responses from the government to prevent this happening in other sectors (e.g. the Senator Casey/Cornyn outbound investment screening proposal)

https://www.casey.senate.gov/news/releases/casey-and-cornyn-...

yeah, I'm not even sure how long we can really squeeze Russia.

If we=USA then I think we can squeeze Russia forever, if we=USA/EU/West then indeed, it will be tougher to pull off

Yeah, more or less. Rising commodity prices will eventually hit Americans though and they may not be tolerant of this in the long term.

It may not even be a sanctions choice by the US. It could be that China decides that making Macs, iPhones, and iPads does not align with "common prosperity." They could make up a new law that says Apple devices need special export inspections, only available on February 30. It would have an outsized effect on the US Markets because Apple is such a large part of both the indexes (which grab headlines) but also their portfolios. (Either directly or through funds they hold). It's not going to cripple the US, but it would inflict pain. Most likely more pain than the Chinese leadership would feel.

Yeah, I'm highly skeptical that China would do that to one of the largest companies in the world, not because they probably couldn't withstand it, but because of the general market signal it would create. Sentiment is already turning or has turned negative on China but it's a big market so many companies persist, but imagine if the biggest company in the world can just be shut out? Many companies would probably stay, but it'd just be to milk what they can out of the market, I doubt any would really invest significant resources in China anymore.

Does any place outside of China manufacture electronic parts (resisters, capacitors, etc)? Even if Apple moved most of their manufacturing to India, I think they'd still be dependent on China (as would everyone else).

Yes. In fact the stuff you list doesn’t come from China at all but Indonesia. More complicated components come from Malaysia and Thailand, as do hard drives and the like.

"If"?

Like...forced sterilization and "re-education" camps for religious and ethnic minorities? https://www.newyorker.com/news/a-reporter-at-large/china-xin...

Spying on Uighers abroad and holding their innocent relatives at home hostage so that they will not agitate against human rights abuses? https://harpers.org/archive/2022/04/the-spies-next-door-uigh...

Or employing slave labor in factories in Western supply chains? https://www.aspi.org.au/report/uyghurs-sale

I think the worst part is where they murder political prisoners by removing their organs to transplant them to rich people from abroad.

Horrible things have been going on in China for decades but nobody dares say anything because we are dependent on their manufacturing.

Woah, hadn't heard about the murdering political prisoners and doing transplants, can you share a link to where I can read more?

I think a reference to https://www.theguardian.com/world/2019/jun/17/china-is-harve....

If your argument is that we ought to be much more harsh against China due to their treatment of their population, then yeah, that's fair. All the stuff you mention, and more, is pretty horrific and deserving of some kind of response.

However, historically, it doesn't seem like the imperial core enacts aggressive foreign policy purely for the benefit of the people in a country. Sanctioning China would be against the imperial core's geopolitical and financial interests at the moment, which means it won't happen, even though China's actions are ethically horrific. GP's "if" refers to if China does something which makes countries in the core actually sanction China.

If I'm wrong, please correct me, it would be interesting to see cases where the core enacts sanctions against its own geopolitical, ideological or financial interests in an attempt to benefit some suppressed group of people. I'm not an expert on the topic, just casually interested.

As with everything, there's nuance. But, yes, it's politically a lot harder to argue for sanctions that will have a significant effect on consumers/voters than those that will not.

Talk about being out of touch. The Uigher and Hong Kong propaganda was built for when Trump was around. It has disappeared now. When it was around, HN posts amplifying it got massive upvotes: https://news.ycombinator.com/item?id=24879870

Even if Uigher thing is important for you for personal, professional or ideological reasons, you need to wait for the correct timing if you are to be heard.

It seems pretty inhumane to see the victimization of minorities in China purely through the lens of US domestic politics, but ok, sure. It’s not about the human rights issues, it’s about…upvotes from American HN readers?

Uighers in China are Muslims and like Muslims in many countries, they are groomed by the Middle Eastern allies of the US... with messages that align with the US interests. In China, that has meant creating unrest by fueling anti-government rhetoric and separatism.

China noticed this and decided to fix it the way they know how... and they have done an incredible job... so the only thing the west got out of it is crying "racism" to their clueless peasants.

Who would be hurt more by that? China or Apple?

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