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The end of Apple’s affair with China

economist.com

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Re: The end of Apple’s affair with China

#51

Post by dragonwriter »

vxNsr wrote: post #28
gjsman-1000 wrote: post #22

Earlier quoted context omitted.

Incorrect. Crimea was invaded in 2014. My point was that in 2012, it was 2 years before the invasion, and less foreseeable despite how quickly in the grand scheme of things it came afterwards.

Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain… the exact same argument being made for why China can’t invade Taiwan, too many companies rely on it.

> Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain…

No, they thought Russia wouldn’t do it because Ukraine had a Russia aligned government up until just before the invasion.

Re: The end of Apple’s affair with China

#52

Post by fakeslimshady5 »

gjsman-1000 wrote: post #13

To me, I think that Apple's reliance on China, and Taiwan, was and is an extremely risky and misguided decision. Imagine if Apple had developed a total reliance on chip factories built in, say, Ukraine, back in 2018. That's about where we are now with Taiwan and China, I believe. It's sure been profitable - but at, I would argue, obscene risk. A few years of TSMC being unavailable would have Apple on life support. Ap…

No post body was provided.

Re: The end of Apple’s affair with China

#53

Post by pdabbadabba »

rapsey wrote: post #33
rocgf wrote: post #31

Earlier quoted context omitted.

> The US is a huge outlier regarding salaries compared to practically anywhere else. That is obviously not true, unless you exclude a lot of countries from "anywhere else".

Ok name the countries.

It might be an exaggeration to say that the U.S. is a huge outlier. I suppose that's subjective. But it certainly looks like an outlier in this summary of average wages of OECD countries: https://data.oecd.org/earnwage/average-wages.htm Average wages in the U.S. are, in fact, the highest among all OECD countries--and much higher than all but a few very small countries (Luxembourg, Switzerland, and Iceland).

I wonder, though, how well this holds up if you look at the lower quintiles of the income distribution in each country--i.e., if you compare poorer workers instead of average workers. I would not be surprised if the bottom quintile earners in the U.S. make less than their counterparts in the EU, and perhaps elsewhere.

Edit: OECD also provides average earnings by activity and if you look at average earnings in "industry," the U.S. is, indeed, far from the top, with many countries in Eastern Europe ranking quite highly. Of course, that could just as easily be an effect of the types of industry located in each country, more than anything. You may still need to pay an American far more to build an iPhone than a Slovenian, which is a question I don't think this data meaningfully addresses.

https://data.oecd.org/earnwage/employee-compensation-by-acti...

Re: The end of Apple’s affair with China

#54

Post by baybal2 »

rapsey wrote: post #14
pcurve wrote: post #7

Very insightful. It corrected a lot of incorrect information I had on this issues. 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. 2. Sales in China peaked in 2015-6 in terms of percentage of revenue for Apple 3. Despite the move, analysts predict 80% of Apple products will still be made in China by 2025.

> 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. Only by US standards. You can pay that much for a factory worker in eastern/south Europe. The US is a huge outlier regarding salaries compared to practically anywhere else.

No post body was provided.

Re: The end of Apple’s affair with China

#55

Post by nmarinov »

rapsey wrote: post #35
Bayart wrote: post #32

Earlier quoted context omitted.

> You can pay that much for a factory worker in eastern/south Europe 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.

A factory worker is living on minimum wage. Nowhere near average.

They don't seem to be minimum wage workers in China[1] and India[2]. And are in fact much closer to median than minimum.

Europe's minimum wages are much higher in comparison[3].

[1]https://en.wikipedia.org/wiki/Minimum_wage_in_China

[2]https://www.india-briefing.com/news/guide-minimum-wage-india...

[3]https://en.wikipedia.org/wiki/List_of_European_countries_by_...

Re: The end of Apple’s affair with China

#56

Post by xadhominemx »

shubhamjain wrote: post #40

The cynical side of me senses that what would land with India and Vietnam is labor-intensive, commoditized assembly of parts. "X% of iPhones manufactured in India" is sort of misleading if the bulk of parts are still coming from China. In some ways, I think this is going China's way. They are moving up the ladder into specialized manufacturing and away from manual labor. A smart strategy considering the demographic d…

The bulk of the parts are not coming from China. Maybe some very commodity assembly and back end steps. But the vast majority of the manufacturing value add happens in Taiwan (semiconductors) and Korea (display).

Re: The end of Apple’s affair with China

#57

Post by rapsey »

gjsman-1000 wrote: post #36
rapsey wrote: post #30

Earlier quoted context omitted.

> Also with the $200B in cash they had When exactly are you talking about? > $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed. $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? > If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for Ameri…

> $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected. > When exactly are you talking about? In 2018, Apple's cash pile hit $285 Billion. I was underestimating…

Your point is very strange. Apple did not just suddenly decide in 2018 to manufacture in China. It is what they have been doing for like 10-15 years before that. If you count from iPod on. In mid 2000s it certainly was not an option to manufacture just anywhere and certainly not by them.

> Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected.

Ok and how many generations is Intel behind TSMC now and how many will they be in 4 years?

You think Apple investors and customers are suddenly going to be OK with a new version of the iphone being worse than its predecessor? To be feasible they can't just catch up, they have to surpass.

Re: The end of Apple’s affair with China

#58

Post by qikInNdOutReply »

waynecochran wrote: post #26

How was Apple able to maintain its production of iPhones in China during the height of Covid-19 in China?

There is the truth, as in the party wants zero covid. And there is the truth. The party wants to earn money, no matter what. So work is allowed, and ignored, just dont tell Xi and some excessive Covid measures are driven into some unimportant areas for show.

The ilusion of a strong state, the same as russias military ..

Re: The end of Apple’s affair with China

#59

Post by gambiting »

Bayart wrote: post #32
rapsey wrote: post #14

Earlier quoted context omitted.

> 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. Only by US standards. You can pay that much for a factory worker in eastern/south Europe. The US is a huge outlier regarding salaries compared to practically anywhere else.

> You can pay that much for a factory worker in eastern/south Europe 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.

Average is a really bad way of measuring what people get paid though. The average pay in Poland is currently 6700PLN/month , and that's a crazy amount of money for that country. Like, teachers are paid 2000-3000PLN, just to show you the disparity between the average and "real" pay of real people. A factory worker will make much closer to 2000PLN a month than 6700PLN.
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