Diplomacy Update ⇥ wsj.com
Selina Cheng and Wenxin Fan, reporting for the Wall Street Journal on November 23:
Workers at the world’s biggest iPhone assembly plant clashed with police after protests erupted at the factory in central China, where the sprawling facility employing more than 200,000 people has been under strict Covid-19 controls for weeks.
While Foxconn, in a statement obtained by the Journal, connected these protests to questions about pay, they are part of more widespread demonstrations in China against the country’s oppressive zero tolerance COVID-19 policies.
Matt Murphy, BBC News:
So often one item comes to symbolise an entire protest movement. In China, that item is a humble piece of blank paper.
Some have argued that the gesture is not only a statement about the silencing of dissent, but also a challenge to authorities, as if to say ‘are you going to arrest me for holding a sign saying nothing?'”
“There was definitely nothing on the paper, but we know what’s on there,” a woman who joined protests in Shanghai told the BBC.
There are powerful images in here — you have probably seen some of them — of demonstrations packed with people holding nothing but empty signs. That gesture is, to my eyes, just as effective as anything which could be written on the pieces of paper.
Yang Jie and Aaron Tilley, also for the Journal:
In recent weeks, Apple Inc. has accelerated plans to shift some of its production outside China, long the dominant country in the supply chain that built the world’s most valuable company, say people involved in the discussions. It is telling suppliers to plan more actively for assembling Apple products elsewhere in Asia, particularly India and Vietnam, they say, and looking to reduce dependence on Taiwanese assemblers led by Foxconn Technology Group.
Turmoil at a place called iPhone City helped propel Apple’s shift. At the giant city-within-a-city in Zhengzhou, China, as many as 300,000 workers work at a factory run by Foxconn to make iPhones and other Apple products. At one point, it alone made about 85% of the Pro lineup of iPhones, according to market-research firm Counterpoint Research.
Josh Horwitz, Reuters:
A Reuters analysis of Apple’s supply chain data shows China’s prominence in the company’s global manufacturing is declining: In the five years to 2019, China was the primary location of 44% to 47% of its suppliers’ production sites, but that fell to 41% in 2020, and 36% in 2021.
Apple will be using microchips produced by the Taiwan Semiconductor Manufacturing Co. factory based in Phoenix, CEO Tim Cook said Tuesday at the event for the facility’s upcoming expansion.
The new chips won’t be powering next year’s iPhones, though, because building fabs takes a long time. TSMC broke ground on its 5nm fab in April 2021, and it won’t start producing chips until 2024. The newly announced 3nm fab won’t make chips until 2026.
Hard to overstate how important it will be if TSMC starts turning out world-class chips from Arizona. For Apple, yes, but more so for the world, overall, to get leading-edge fabrication out from under the thumb of China.
The timing of these articles is curious. It would be reasonably easy to conclude Apple is stepping up its efforts to diversify device manufacturing because of reduced iPhone 14 Pro production numbers instead of China’s human rights abuses. But these efforts have likely been underway for a while. It would be impossible to shift Apple’s supply chain within a matter of weeks or months; Counterpoint Research says a timeframe of years is more likely. And, as Gruber writes, a diversifying electronics manufacturing industry allows for more flexibility for every company in the business, not just Apple.
Until that happens, however, Apple remains in a tense relationship with policymakers in China. It recently altered AirDrop in the country in a way that makes it more tedious for demonstrators to directly exchange information. Apple, powerful and rich as it is, remains under the influence of not wanting to upset lawmakers in the country it most relies upon. Many people have observed how unlike the Cook doctrine it is for Apple to be so dependent on third-party manufacturing: is device assembly not a “primary technology” the company should “own and control”? But he was primarily responsible for Apple’s migration to contract factories when he was hired in 1998. It was a choice that contributed to Apple’s ability to survive its bleakest time; now, nearly twenty five years later, it looks increasingly like a liability.