Hacker News Reader

Comment by toast0 | Hacker News Reader

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.

View on HN

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.

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.

> 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.

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

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

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.

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.

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...

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.

Batteries?

>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.

> 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

Reply on news.ycombinator.com