XPost: talk.politics.guns, alt.fan.rush-limbaugh, alt.business
XPost: sac.politics
In article <ssh638$iach$
[email protected]>
<
[email protected]> wrote:
Apple uses slaves to build toys for stupid people.
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.
The Zhengzhou factory was convulsed in late November by violent
protests. In videos posted online, workers upset about wages and
Covid-19 restrictions could be seen throwing items and shouting
�Stand up for your rights!� Riot police were present, the videos
show. The location of one of the videos was verified by the news
agency and video-verification service Storyful. The Wall Street
Journal corroborated events shown in the videos with workers at
the site.
Coming after a year of events that weakened China�s status as a
stable manufacturing center, the upheaval means Apple no longer
feels comfortable having so much of its business tied up in one
place, according to analysts and people in the Apple supply
chain.
�In the past, people didn�t pay attention to concentration
risks,� said Alan Yeung, a former U.S. executive for Foxconn.
�Free trade was the norm and things were very predictable. Now
we�ve entered a new world.�
One response, say the people involved in Apple�s supply chain,
is to draw from a bigger pool of assemblers�even if those
companies are themselves based in China. Two Chinese companies
that are in line to get more Apple business, they say, are
Luxshare Precision Industry Co. and Wingtech Technology Co.
On calls with investors earlier this year, Luxshare executives
said some consumer-electronics clients, which they didn�t name,
were worried about Chinese supply-chain snafus caused by Covid-
prevention measures, power shortages and other issues. They said
these clients wanted Luxshare to help them do more work outside
China.
The executives referred to what is known as new product
introduction, or NPI, when Apple assigns teams to work with
contractors in translating its product blueprints and prototypes
into a detailed manufacturing plan.
It is the guts of what it takes to actually build hundreds of
millions of gadgets, and an area where China, with its
concentration of production engineers and suppliers, has
excelled.
Apple has told its manufacturing partners that it wants them to
start trying to do more of this work outside of China, according
to people involved in the discussions. Unless places like India
and Vietnam can do NPI too, they will remain stuck playing
second fiddle, say supply-chain specialists. However, the
slowing global economy and slowing hiring at Apple have made it
hard for the tech giant to allocate personnel for NPI work with
new suppliers and new countries, said some of the people in the
discussions.
Apple and China have spent decades tying themselves together in
a relationship that, until now, has mostly been mutually
beneficial. Change won�t come overnight. Apple still puts out
new iPhone models every year, alongside steady updates of its
iPads, laptops and other products. It must keep flying the plane
while replacing an engine.
�Finding all the pieces to build at the scale Apple needs is not
easy,� said Kate Whitehead, a former Apple operations manager
who now owns her own supply-chain consulting firm.
Yet the transition is under way, driven by two causes that are
feeding on each other to threaten China�s historic economic
strength. Some Chinese youth are no longer eager to work for
modest wages assembling electronics for the affluent. They are
seething in part because of Beijing�s heavy-handed Covid-19
approach, itself a concern for Apple and many other Western
companies. Three years after Covid-19 started circulating, China
is still trying to crush outbreaks with measures like
quarantines, as many other countries have returned to
prepandemic norms.
Protests in Chinese cities over the past week, during which some
demonstrators called for the ouster of President Xi Jinping,
suggested criticism over Covid-19 restrictions could build into
a larger movement against the government.
All this comes on top of more than five years of heightened U.S.-
China military and economic tensions under the Trump and Biden
administrations over China�s rapidly expanding military
footprint and U.S. tariffs on Chinese goods, among other
disputes.
Apple�s longer-term goal is to ship 40% to 45% of iPhones from
India, compared with a single-digit percentage currently,
according to Ming-chi Kuo, an analyst at TF International
Securities who follows the supply chain. Suppliers say Vietnam
is expected to shoulder more of the manufacturing for other
Apple products such as AirPods, smartwatches and laptops.
For now, consumers doing Christmas shopping are stuck with some
of the longest wait times for high-end iPhones in the product�s
15-year history, stretching until after Christmas. Apple issued
a rare mid-quarter warning in November that shipments of the Pro
models would be hurt by Covid-19 restrictions at the Zhengzhou
facility.
In November, as the worker protests in the facility grew, Apple
issued a statement assuring it was on the ground looking to
resolve the issue. �We are reviewing the situation and working
closely with Foxconn to ensure their employees� concerns are
addressed,� a spokesman said at the time.
The risk of too much concentration in China has long been known
to Apple executives, yet for years they did little to lessen it.
China supplied a literate and diligent workforce, political
stability and a huge local market for Apple�s products.
Taiwan-based Foxconn, under founder Terry Gou, became an
essential link between Apple in California and the Chinese
assembly plants where iPhones get put together. Foxconn managers
share a language and cultural background with mainland workers.
Pegatron Corp., another Taiwan-based contractor, has played a
smaller but similar role.
And both the government in Beijing and local governments in
places such as Henan province, home to the Zhengzhou plant, have enthusiastically supported Apple�s business, seeing it as an
engine of jobs and growth.
Even now, when ever-harsher anti-American rhetoric flows each
day from Beijing over issues such as Taiwan and human rights,
that backing remains strong.
People�s Daily, the mouthpiece of the Chinese Communist Party,
hailed the Apple production site in a Nov. 20 video, saying it
accounted directly or indirectly for more than a million local
jobs. Foxconn shipped about $32 billion in products overseas
from Zhengzhou in 2019, according to a Chinese government-linked
think tank. All told, the Foxconn group accounted for 3.9% of
China�s exports in 2021, according to the company.
�The government�s timely assistance�continuously provides a
sense of certainty for multinational companies like Apple, as
well as for the world�s supply chain,� the People�s Daily video
said.
Yet such words ring hollow to many U.S. businesses in light of
stringent anti-Covid measures by the government that have
hampered production and roused worker unrest. A survey by the
U.S.-China Business Council this year found American companies�
confidence in China has fallen to a record low, with about a
quarter of respondents saying they have at least temporarily
moved parts of their supply chain out of China over the past
year.
To keep operating during government Covid measures, the
Zhengzhou factory is among those compelled to adopt a system in
which workers stay on-site and contact with the outside world is
limited to the bare minimum to keep the goods flowing. Foxconn
has sealed smoking areas, switched off vending machines and
closed dining halls in favor of carryout meals that workers
bring back to their dormitories, often a half-hour walk away,
workers said.
Many have escaped, jumping fences and walking along empty
highways to get back to their hometowns. In November, the
pandemic policies and pay disputes further fueled workers�
grievances. Some clashed with police at the site and left
smashed glass doors.
Many of those abandoning the factory were young people who said
on social media that they decided wages equivalent to $5 or less
an hour weren�t enough to compensate for tedious production
work, exacerbated by Covid restrictions.
�It�s better for us to skate by at home than to be sucked dry by
capitalists,� one person who identified herself as a departed
Foxconn worker posted on her social-media account after the
protests.
Asked for comment, a Foxconn spokesman referred to earlier
statements in which the company blamed a computer error for some
of the pay issues raised by new hires. It said it guaranteed
recruits would be paid what was promised in recruitment ads. The
spokesman declined to comment further.
China�s Covid policy �has been an absolute gut punch to Apple�s
supply chain,� said Wedbush Securities analyst Daniel Ives.
�This last month in China has been the straw that broke the
camel�s back for Apple in China.�
Mr. Kuo, the supply-chain analyst, said iPhone shipments in the
fourth quarter of this year were likely to reach around 70
million to 75 million units, which he said was around 10 million
fewer than market projections before the Zhengzhou turmoil. The
top-of-the-line iPhone 14 Pro and Pro Max models have been
particularly hard-hit, he said.
Accounts vary about how many workers are missing from the
Zhengzhou factory, with estimates ranging from the thousands to
the tens of thousands. Mr. Kuo said it was running at only about
20% capacity in November, a figure expected to improve to 30% to
40% in December. One positive sign came Wednesday, when the
local government in Zhengzhou lifted lockdown restrictions.
One Foxconn manager said hundreds of workers were mobilized to
move machinery and components by truck and plane nearly 1,000
miles from Zhengzhou in central China to Shenzhen in the south,
where Foxconn has its other main factories in China. The
Shenzhen factories have made up some, but not all, of the
production gap.
Meanwhile, Foxconn is offering money to get workers to come back
and stay for a while. One of its offers is a bonus of up to
$1,800 for January to full-time workers in Zhengzhou who joined
at the start of November or earlier. Those who wanted to quit
have gotten $1,400.
India and Vietnam have their own challenges.
Dan Panzica, a former Foxconn executive who now advises
companies on supply-chain issues, said Vietnam�s manufacturing
was growing quickly but was short of workers. The country has
just under 100 million people, less than a 10th of China�s
population. It can handle 60,000-person manufacturing sites but
not places such as Zhengzhou that reach into the hundreds of
thousands, he said.
�They�re not doing high-end phones in India and Vietnam,� said
Mr. Panzica. �No other places can do them.�
India has a population nearly the size of China�s but not the
same level of governmental coordination. Apple has found it hard
to navigate India because each state is run differently and
regional governments saddle the company with obligations before
letting it build products there.
�India is the Wild West in terms of consistent rules and getting
stuff in and out,� said Mr. Panzica.
The U.S. embassies of India and Vietnam didn�t respond to
requests for comment.
Nonetheless, �Apple is going to have to find multiple places to
replace iPhone City,� Mr. Panzica said. �They�re going to have
to spread it around and make more villages instead of big
cities.�
�Selina Cheng contributed to this article.
Write to Yang Jie at
[email protected] and Aaron Tilley at
[email protected]
<
https://www.msn.com/en-us/money/news/apple-makes-plans-to-move- production-out-of-china/ar- AA14QCFL?ocid=BingHp01&cvid=6056496d4e8246b7d045b2d1004a7bf4>
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)