China Takes Taiwan’s Place as Apple’s Biggest Source of Suppliers

Apple earlier this week issued its 2021 supply chain report card and supplier list (PDF). With increasing coverage of the Chinese government’s alleged genocide of Uyghurs, these reports have attained a new level of scrutiny, particularly as some of Apple’s suppliers have been implicated in accusations of forced labour.

Cheng Ting-Fang and Lauly Li of Nikkei analyzed this year’s supply chain list and found that Chinese suppliers are, for the first time, more plentiful than any other country, taking Taiwan’s place:

Jeff Pu, a senior analyst with GF Securities, said China has a world-class electronics parts and assembly supply chain thanks to years of cultivation not only by Apple but also Chinese smartphone makers such as Huawei and Oppo.

“The only electronic components that China cannot yet catch up on are semiconductors,” Pu said. “The growth of China’s suppliers on [the] Apple Supplier List also shows that China contained the COVID-19 pandemic well in 2020.”

Cost and quality are the main reasons Apple has stuck with the country despite political pressure, according to Eric Tseng, chief analyst with Isaiah Research.

Merely counting suppliers is an imperfect analysis, since a company like Foxconn, which assembles many of Apple’s products, is a single supplier counted the same as a print shop for its documentation. One of those suppliers is clearly more valuable to Apple than the other. Still, this is a worthwhile look at Apple’s deepening relationship with businesses in China as that country tightens its nationalist policies.

I deliberately have not written about that report last month in the Information pointing fingers at seven suppliers that have ties to forced Uyghur labour. One reason is because I do not have a subscription to the Information, so I cannot read the report in full and must rely on summaries elsewhere, like Katie Canales’ at Insider.

The second reason is because I am, frankly, lost for words and struggle to understand what I may contribute. Forced labour of any kind is indefensible. If Apple is not ensuring that its supply chains are fully free of complicity in alleged genocide, that is an ethical failure of unimaginable human suffering and, from a business perspective, will stain the company’s reputation forever.

What the Information’s report revealed most of all is that the offenders are a couple of layers deep in the supply chain. From Canales’ summary:

Avary Holding, which makes circuit boards for Apple devices in the Chinese city of Huai’an, added 400 Xinjiang labor workers to its workforce between 2019 and 2020 at one of its factories, per the report. Avary denied those claims to The Information. And Shenzhen Deren Electronic, which has made antennas and internal cables for Apple, has taken in 1,000 labor workers from Xinjiang, according to the report.

The outlet also viewed a video produced by AcBel Polytech, one of the suppliers, that shows how the company used forced labor from Xinjiang workers sometime between late 2018 and early 2019.

AcBel produces power supplies. According to Canales, none of the manufacturers cited in the report are unique to Apple.

What this highlights is that the final assembly stage only represents a fraction of the people responsible for all of the pieces inside a MacBook Pro or a set of AirPods. Moving iPhone manufacturing to the United States, as many commentators and policymakers routinely cry for, would not correct any of the ills in this report because Shenzhen Deren Electronic would probably still be making antennas and cables.

It is hard to tell if things are changing. This Nikkei analysis implies that Apple’s relationship with Chinese manufacturers is deepening, but an article earlier this year from the same reporters said that Apple was diversifying. Most of Apple’s products bear the inscription “assembled in China”, but the iMac that iFixIt tore down indicated that it was “made in Thailand”, perhaps hinting at a greater investment in Thailand for that particular product.1 But whether any of its smaller components — its screws, wires, circuitry, soldering — can be certified free of forced Uyghur labour is something perhaps not even Apple knows the answer to despite its audits. I do not think we should give up and accept this, but I have to wonder how industries that are so dependent on suppliers in China can fully disentangle themselves from forced labour.

  1. In the U.S., the FTC says that the difference between “assembled in” and “made in” for American manufacturing depends on the total manufacturing costs. The same is true of the Competition Bureau in Canada. I cannot find the same documentation for Thailand, but I imagine it is a similar standard. ↥︎