Hacker News Reader

Comment by supernova87a | Hacker News Reader

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?

View on HN

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.

We do. Furniture companies use it a lot already. You can be licensed to import lumber, manufacture using local labor, and export -- without having a license to sell locally. We don't have SEZ, but do have big industrial / IT parks offering support for foreign enterprise. Some are pretty nice.

Overall, the permitted activities on your business license matter. Getting licensed is usually easier than people think, except a handful of sensitive areas.

A small slice of life: this does make furniture tradeshows sad affairs. You can see great things made in Vietnam, but you can't actually buy any of them. This has improved a lot over the last 10 years, but it's still somewhat of a thing.

It seems pretty silly to discourage sale of Vietnamese made furniture in Vietnam.

From my reading of the situation, it’s not discouraged, rather the companies would rather avoid finally paying tariffs and instead sell abroad. Not sure how significant the charges are?

It depends how you look at it. I doubt it's the companies avoiding tariffs, it's that customers in Vietnam wouldn't buy the goods because the tariffs would make them too expensive. If Vietnamese would buy the goods anyway I'm sure the companies would love to sell their goods in the country.

https://www.apple.com/supplier-responsibility/pdf/Apple-Supp...

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.

I was born in China and my family runs factories here for many years.

What you mentioned is true, the absolute majority of the supply chain of the big name companies are still in China, and many of the alternatives in Vietnam are somehow managed by PRC background capital.

However, it’s absolutely a good start. The eco mic crisis raising in China will be like the 1930s in US, if not worse. My family are actively searching for ways to selling out everything and move out the country but it’s clearly prohibited by the Gov. We are worrying it will eventually becomes a new Third Reich in near future, when the supply chain will be completely destroyed.

> it’s absolutely a good start.

Depends on why you think it's good. If you think it will hollow out PRC industry and will lead to collapse of CCP into Third Reich leading to collapse them you will probably be disapointed. CCP _wants_ PRC companies to expand in region because it's "cooperative" sourcing strategy that helps PRC geoeconomic posture by increasing dependence. Especially in Vietnam where PRC control over Mekong = influence over Vietnamese agriculture and energy via Laos hydogeneration upstream. The TLDR PRC moved into Vietnam long before tariffs, and while tariff dodging is nice perk, it's mostly another layer of influence/control over Vietnam.

> supply chain will be completely destroyed. ... > clearly prohibited by the Gov

Ergo why PRC supply chains won't be destroyed because apart from getting rid of polluting light industries where value:externalities do not compute, most relevant strategic supply chains will be protected in PRC for domestic use. I have family / friends who run factories as well, the ones in lowend got fucked whereas the ones higher up supply chain are doing fine. Those levers introduced last few years to prevent capital flight is why PRC is managing the eco crisis fine... a crisis by the way they chose to initiate (i.e. real estate) like past deleveraging efforts specifically because they have more lever to prevent actual crisis. But yeah people don't like the wild rides coming would be wise to look for excape plan, but it's going to be harder and harder to escape with much. Lots of people going to be fucked, while lots will continue to get rich, which is to say, same old China since the 90s.

It will help Vietnam develop knowledge and know-how and eventually we might see Vietnamese companies in the field. That's how China got started.

Which will be great. The more countries that gets developed on labour driven export based manufacturing, the better. Before automation starts closing that window.

Can you say more on why your family is trying to sell their factory.

Does the Zero Covid policy or the power crisis (because of China stopping the import of coal from Australia) has anything to do with it.

Not GP, but here are two more factors:

* Xi Jinping's increasingly tight and authoritarian control

* the upcoming demographic crisis in China: 1. its population will start shrinking (earlier and faster than assumed until recently), 2. the dependency ratio (proportion of non-working age population to working age population) will go up massively, 3. due to the demographic development (inverted pyramid), selective abortion and increasing women's liberation, the imbalance in the "marriage market" will get massively worse (150+ men per 100 women).

1/3 of men being incels caused by government policy isn’t going to go down well. Surely they can just import women though?

I'd assume that if they are given free choice, Chinese women are going to prefer husbands who do well in life. That would imply that the 1/3 of men who end up perpetually single are most likely poor farmers from the countryside, i.e. people without the means to travel abroad to meet someone there.

I’m saying 1/3 of men being without women will lead to violence. Or an even more extreme police state than now. Or both.

Australia would do well to not sell China iron ore either only the finished steal product; it would reduce transport costs and CO2 by 40%.

Hope your family can get out.

>My family are actively searching for ways to selling out everything and move out the country....We are worrying it will eventually becomes a new Third Reich in near future, when the supply chain will be completely destroyed.

May I ask is this in mainland china? I'm a bit surprised because we usually don't think like this. Most older generations (50s-60s) from the mainland would not consider migration unless they are from extremely previledged background with huge assets (still very unlikely, at least in mainland). Also I doubt any mainland chinese person would be familiar with the concept of the great depression and the third reich.

My ex-wife is Chinese and over the years she did mention a bit about her education.

Things like the great depression were covered in school. These make excellent examples of the "evils of capitalism" and how a communist government would protect you from these "evils".

That is only on the surface, you then have to look at companies that are listed elsewhere but are actually Chinese ( A Chinese company listing its HQ somewhere else ), or completely owned by the Chinese Investment.

You then look at rest of non-Chinese owned companies, how many of those are completely dependent on Chinese customers ( If 60%+ of your revenue are from China ) or dependant on Apple ( given this is an Apple Supplier list ) where Apple has a tendency, habit or even a strategic mindset to help Chinese companies into their supply chain as part of its diversification, or cost reduction.

And if people ( as few on HN are already doing ) continue to think Apple relying on Taiwanese company called Foxconn. You may want to do a search on Luxshare or more commonly known as ICT. And see how it started and Tim Cook’s opinion on it. Dating back to 2016.

Apple Silicon is made in Taiwan.

Wow. Is the geopolitical hedge there with Texas or something?

Our Disaster Recovery Plan is still in the discovery stage

TSMC (Taiwan Semiconductor Manufacturing Company) is the largest contract manufacturer of complex CPUs there is.

They're building a massive fab in Phoenix.

Isn't dispersing a core business, that the global economy relies on, to other countries a bad move for Taiwan? If advanced micro chips are made in another country doesn't that mean China might be more likely to use a forceful invasion and other countries can say "Yes, this is terrible - but at least we still have our chips!"

Taiwan doesn't own TSMC. They don't tell TSMC how to do business any more than the US government dictates to Intel. I'm sure it wields influence, of course. The US government offers incentives for companies to build foundries in the US, and there's a large pool of skilled workers in the industry in that area. Also Taiwan is a small country, so it's quite possible TSMC needs to expand internationally in order to be able to scale up it's business.

TSMC was founded as a Taiwan government initiative, the government still owns 6% and has a representative on the board of directors.

Sure, but the US gov't provided no seed money or had any role otherwise in founding of Intel, unlike TSMC. Up until recently the US chips companies were pretty much on their own without much special pampering. TSMC has little or no desire to expand beyond their tiny island -- not only b/c of the gov't investment's national stake in TSMC, but also TSMC's business model doesn't work -- and certainly can't maintain its fat profit marign -- without gov't largess and econ protection.

Yeah I do wonder about this. Atm, US is putting on immense pressure on chip manufacturers and their countries to control the supply and add factories in US soil.

Once the factories are built, would US be as invested in defending Taiwan and further, South Korea? I know US won’t give them up easily, but when push comes to shove … I don’t know.

Didn't TSMC buy all of Motorolas fabs in Austin a long time ago? I'm not sure if any of their FABs in Austin still exist or are current with the most modern processes, or if they are just running design centers there at this point.

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.

In fact for most of the iPhone's history the value of components manufactured in the US, and therefore the investment in the US in iPhone manufacturing, was much greater than the value added in China from final assembly.

China does surprisingly little when it comes to the advanced stuff.

smic (partially state owned) is only two nodes behind tsmc and samsung: https://www.tomshardware.com/news/china-chipmaker-smics-7nm-...

The result might be close to two nodes behind, but the design and production cost might be higher since they don't have access to EUV machines. I'd say they're further behind than "two nodes". But still, pretty damn advanced.

If their process is essentially copied from TSMC, can they keep up with R&D though? China is becoming an increasingly less desirable place to live, so just poaching Samsung and TSMC engineers and copying the process might be increasingly difficult. And I doubt they'll be able to build the tight relationship with machine designers/manufacturers like ASML that TSMC has.

In terms of semi-conductors, yes. But in terms of industrial machines, chemicals, and pharma, China is an important player and has been advancing by impressive leaps.

It's almost certainly final assembly, and plugged into the supply chain next door.

The other parts aren't all made in China. The displays are made in Japan and Korea.

Other than the battery I don't think any parts are made in China. It's only assembled there.

I don't think so. Some displays are (maybe used to?) made by a Chinese company called BOE in China. Specifically they are made in Sichuan Province, China.

BOE got caught trying to slip sub-spec panels into the pipeline and got spanked for it.

Reply on news.ycombinator.com