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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

#141

Post by dragonwriter »

coredog64 wrote: post #138
hunterb123 wrote: post #71

Earlier quoted context omitted.

The PRC constantly skirmishes with India and has land grabbed many islands in the South China Sea, many already occupied. Yes, since and during the communist takeover of China, all of its military might has generally been directed inwards at it's own people, but they are still a military force and are well organized. I'd equate the current period of the PRC to the Soviet arms build up of the Cold War.

What we’ve found out in Ukraine is that much of the military spending has been siphoned off by corrupt leadership. How do we know that the same thing isn’t happening in China?

> What we’ve found out in Ukraine is that much of the military spending has been siphoned off by corrupt leadership

We didn’t find that out in Ukraine, we’ve known that from fairly widely circulated news, often from direct participants in the corruption (such as the people to whom essential gear was sold), consistently since at least the First Chechen War of the mid-1990s (where sales of fuel, weapons, and ammunition by Russian military personnel with custody over them to the enemy were a significant and recurring thing.)

What we have learned in Ukraine is a better idea of the extent of the effect of that longstanding problem on current Russian military capacity.

Now, it could be that China has a similar problem and has been better at keeping it under wraps than Russia has been for the past 30 or so years, but there is not much reason to suspect that.

Re: The end of Apple’s affair with China

#142

Post by UltraViolence »

This is all part of the "Great Decoupling" that will happen in the next decade. Apple will be hurt by this, no doubt, since it will not be able to find suitable replacement suppliers for some of its components, and it's loath to buy from Samsung, its biggest rival.

Ergo, Apple may go down when push comes to shove and the U.S. government gets into a tangle with China.

Re: The end of Apple’s affair with China

#143

Post by UltraViolence »

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.

The kicker is that Apple has made itself too dependent on Chinese suppliers. It has outsourced much of the development of components and has lost in-house know-how on how to recreate those parts if a fall-out were to occur.

This is all according to Apple's "Don't leave money on the table" mantra where they want increasing profits year after year. In the end, it'll hurt them...bad.

Re: The end of Apple’s affair with China

#144

Post by UltraViolence »

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…

I don't see China invading Taiwan, since the U.S. has made it abundantly clear that they'll intervene militarily, and the Chinese know they are (as of yet) no match for the U.S. They'll bide their time. Chinese think in terms of centuries, not decades. The hive's important, not the individual worker.

I do think they'll need to wait a very long time since if the West decouples they'll be thrown back decades if not more, with no hope of ever catching up.

But if a spat were to occur, Apple would definitely be hurt...BIG TIME. In fact, I could even see the company collapse if it were to be cut-off from its supplier base in China and Taiwan.

Re: The end of Apple’s affair with China

#145

Post by dirtyid »

evgen wrote: post #98
makeitdouble wrote: post #37

I tried looking around to get how much of the iPhones are actually made in India and couldn’t find any clear information. Apple seems to be relying on Foxconn’s Indian subsidiary, and it is described as an assembly partner, so I’d expect all the parts and chips to be coming from neighboring countries (so mostly China?) It is still a pretty big deal, but my assumption would be that aside from the trumpeting headlines,…

It is worth noting that a lot of components of the iPhone are not sourced from within China. China is where it is assembled, but the screens, RAM, CPU, and storage are produced in other countries. Of the remaining parts I think batteries and radios are the ones that will probably retain production in China the longest.

Apple has ~150 suppliers in PRC, other countries barely break 30. They have some of the higher value components, but PRC pockets ~25% of BOM since iPhoneX, so likely higher now with BOE, YMTC (if it survies), Winstron and Luxshare, as as far as I know, a lot of the hardware design shifted to SZ during covid.

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.

Re: The end of Apple’s affair with China

#147

Post by checkyoursudo »

bergenty wrote: post #131
yalogin wrote: post #122

The thing with outsourcing is, the vendor will themselves set up shop wherever the customer wants. In this case all the chinese companies are simply setting up plants in India and Vietnam, so they end up not losing any business in the short term. Same thing happens with software. All of the India consulting firms set up shop all over the world, for example Mexico to provide similar time zones to their US customers ye…

It makes a difference though. The Indian factories hire all Indian staff and this makes it resilient to any trade war issues that may arise between China and the U.S.

Secondary sanctions may hit the Chinese-owned Indian companies, which could make them no more resilient at all. No? It seems like doesn't matter so much who is employed there as much as who owns them.

Re: The end of Apple’s affair with China

#148

Post by yamtaddle »

dragonwriter wrote: post #46
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…

> For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen? No one paying even a little bit of attention thought “can’t” since the invasion of Georgia in 2008. In 2012 they would have thought “has no reason to at the moment”, much as they would about Belarus today; what was unexpected in 2014 was the Maidan Revolution tossing out the Russia-aligned government, to which the inv…

> > For Taiwan, China, invading? Can't happen.

> 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.

Re: The end of Apple’s affair with China

#149

Post by pwinnski »

michpoch wrote: post #89
rapsey wrote: post #73

Earlier quoted context omitted.

I don't understand your point. Google says Chinese manufacturing jobs pay $11k per year in 2020. This is a salary level of a south/east European factory worker.

That's the salary. Now, you have employers costs, which will be much higher in socialistic countries in EU.

Quite the (wrong) assumptions, in service to a preconceived narrative.

What you term "socialistic" countries handle government services via taxes more than levies on employers.

It looks like the employer cost in China is 40.92%[0], while the highest percentage in Europe is 32.4% in Italy, and Switzerland imposes only 9.5%.

0. https://topsourceworldwide.com/international-salaries/

Re: The end of Apple’s affair with China

#150

Post by sgjohnson »

slaw wrote: post #76
alistairSH wrote: post #49

Earlier quoted context omitted.

Belgium. Denmark. Sweden. Germany. All relatively competitive with US on an hourly basis.

Local grocery in Seattle is hiring, $26/hour. From what I read on hackernews is like entry software engineer job in Sweden.

Cost of living between Seattle and Stockholm is also probably comparable…

But to be fair, US software engineer salaries are super high compared to everywhere except Switzerland.

However there’s still no way in hell a grocery store anywhere in Europe is going to pay someone $26/h.

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