The end of Apple’s affair with China

This, this and THIS !

Do not underestimate Apple when it comes to supply chain management, they are the kings.

Don't believe me ?

Look at the COVID-induced semi-conductor shortage.

Every other manufacturer out there that relies on a very strict definition of Just-In-Time supply chain has had issues with stupid-long lead times.

Meanwhile Apple ? Most of their product range has remained on next-day delivery throughout, and custom-build stuff has only been delayed by a few weeks rather than the months and years seen at other manufacturers.

Apple work much much closer with their supply chain than the majority of other manufacturers out there.

BTW I didn't mean my comment as a critique of Apple, I think they did get everything right on the logistics side given what has been hapenning for the last decade (they weren't immune, but they clearly navigated it extremely well). But I would be warry of being too optimistic on their diversification efforts or looking at it as a done deal.

Kinda reminds me of the effort to have the Mac Pro assembled in the US. A lot of people were looking at it im very simple terms, when it's a really difficult thing to do in any viable economical fashion.

Reality is apart from shifting final assembly to other countries (insert 8$ per phone meme), PRC is moving up value chain in Apple. And if Apple wants to keep PRC market access, they'll keep the affair happening. Hence US gov had to drop the boot with YMTC.

Countries can be more or less strict about what threshold needs to be passed to be accepted as made locally, but I'd expect Malaysia to not be against computers production getting attributed to them.

That is obviously not true, unless you exclude a lot of countries from "anywhere else".

You'd be well bellow the gross average everywhere in the EU, even the poorest countries. Outside of the EU you might have a shot in Albania or Moldova, but you'd lack all the infrastructure and stability you'd need for large scale manufacturing.

I don't know about eastern Europe. In Spain, we are in the south, you can't pay 530 per month. Legal minimum salary is around double that number, then you need to add SS (30 to 40% of that) and just FYI, there's no way people will work in a factory for minimum wage anyway, so think of 2k for entry positions.

That supply chain part was traditionally a strong draw for electronics manufacturing to be done in China as you can get parts from down the street rather than the next city or state or country over.

Yes, and no. Apple has done manufacturing in America before, a long time ago (remember the Apple II?). Also with the $200B in cash they had, they could probably build every factory down to the screw factory they needed. Also worth remembering is that iPhone bodies don't change very much (iPhone SE is like, a decade of a design and still going). $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed.

If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for American customers, Chinese manufacturing for European/Asian customers, Indian manufacturing for Indian customers.

NVIDIA still can make parts in Korea if need be, even if they are a generation behind. AMD could be manufacturing on Intel foundries before we know it. Samsung has Exynos in Korea as well, which is better than nothing.

Maybe that's true in the abstract, but how did those in power act based on this obvious threat?

Europe completely refused to even begin to diversify its natural gas sources until this year, even though that obviously should have happened after the annexation of Crimea at the very latest. They invited catastrophe by relying on Russian energy.

In practice, they didn't take the threat seriously. They thought it wouldn't happen, they gambled quite a lot on that outcome.

A CCP invasion of Taiwan would be even more disastrous for the PRC. They would need to conduct an amphibious assault, gain air superiority against "the quad" (no easy task), and would be unlikely to gain control of TSMC.[0]

I think my reason for miscalculating the Russian invasion had to do with reasons unrelated to the actual military campaign: Putin felt that Russia's culture was existentially threatened by the West, its ability to invade was monotonically decreasing, and believed that a largely ineffectual, predictable US administration that appears to follow the mantra "speak loudly and carry a paper straw" wouldn't resort to extreme measures to stop Russia. In other words, invasion made total sense from a certain political-cultural calculus.

I'm much more worried about the CCP, who have become increasingly ultra-nationalist, including concentration camps and racial-superiority indoctrination in schools (including something like a "stabbed in the back" narrative). The political crackdowns have become quite severe, and the Chinese financial is in bad shape, so an attempted invasion of Taiwan may increasingly be the thing the Party sees as bolstering their position domestically.

The invasion would still be a disaster, and I have a feeling that the US & Taiwan already have plans to relocate the personnel from Taiwan's TSMC facilities to the US in order to use their specialized knowledge in order to keep producing superior chips.

[0] https://www.jonstokes.com/p/why-a-chinese-invasion-of-taiwan

> That’s... Not at all the general thought.

Indeed. AFAIK the general sentiment is that the only way they don't invade some time this century is if they manage to Hong Kongize them to transition them toward full annexation, through soft power.

Where?

Intel would sell them their fabs, but they don't have a process as advanced as TSMC 5nm. Samsung might be able to compete, but their yields are wickedly low and still slightly behind TSMC. GlobalFoundries might accept Apple as a customer, but then we'd basically have two Qualcomms.

What is Apple's plan-b for Taiwan?

Apple's production capacity has taken decades to build and will take years at minimum to restore. Their exposure is so immense that it would make sense for them to spend a percentage of their cash position just on lobbying to try and prevent the outbreak of war.

Their risk is obscene. They're poorly positioned because their manufacturing base is undiversified and in the case of "complete shutoff of goods from China" it will be years before they're back at capacity.

I speculate that labor is not a significant contributor the cost to produce an iPhone.

Though I wouldn't be surprised if the battery comes from China.

Instead, they do extensive testing and quarantining to prevent outbreaks at a factory like that.

So no, it isn’t “performative zero COVID”.

Who knows -- there may have been a time where one was superior and the other inferior but slowly pilfering features, but for right now moving from iOS to Android is like an American considering emigration...

(Where you gonna go... Montreal? If I rolled my eyes any harder, my retinas would literally detach.)