Wired
In 2011, Apple disclosed its supplier list for the first time. In the following nine years, the number of suppliers from China has continued to grow. Even when the United States continues to suppress the development of Chinese technology companies, this situation has not been affected. The list of Apple suppliers covers 98% of the company’s spending on materials, manufacturing, and assembly in the last fiscal year (2020). Although it does not disclose the value of each company’s purchases, the report can be used as a barometer of Apple’s dependence on suppliers in different parts of the world.
According to the “Post” analysis of Apple’s 2017 and 2020 supplier lists, nearly one-third of the new shortlisted companies are from mainland China. The increase in the number of mainland companies used by Apple manufacturers highlights China’s role in the global high-tech supply chain. The importance of. Apple is known for its strict quality standards, and Chinese suppliers have gradually stepped into the “sacred altar”, which illustrates my country’s growing manufacturing and technological capabilities, as well as competitive prices.
Apple’s 2020 supplier list to watch
Apple recently released its list of the top 200 suppliers for 2020. In this list, 51 are located in China, higher than 42 in 2018 (Apple did not release data for 2019). Experts say that even if some suppliers are not from mainland China, they are also located in mainland China, because China The supply chain integration in the mainland is much more advanced than other places. And the mainland surpassed Taiwan for the first time. At the same time, compared with the 2018 supplier list, in terms of regions, the number of mainland Chinese manufacturers newly included in Apple’s supply chain is the most, up to 12 companies.
Newly added mainland Chinese manufacturers include: Fujian Nanping Aluminum, Zhaoyi Innovation, Jiangsu Jingyan, Lingyi Zhizhi (formerly Lingyi Technology), Derun Electronics, Changying Precision, Fuchi Hi-Tech, Suzhou Shengli Precision, Shenzhen There are 12 companies including Xinlun Technology, Tianma Microelectronics, Guangzhou Zhongshan Metal Technology, and Suzhou Xinjieshun Hardware & Electromechanical. Four companies including Guangdong Chaoyang Electronics and Jilin Liyuan Refining have been removed. The Hong Kong-based supplier Shanghai Industrial Holdings returned to the supply chain list after being delisted last year. However, domestic suppliers Artesyn Technology and Chuangliang Technology did not appear on the list.
In Taiwan, 6 new companies have been added and 6 have been deleted. New companies include leading thermal module companies Shuanghong, Kangkong, GIS, Maolin, Jiaze and Jing Technology. However, Zhenglong, Pegatron’s Fuyang Technology, and TPK’s subsidiaries in mainland China Jingjia Optoelectronics, Darfon, Meilv and Mingxiang Technology will not become Apple’s suppliers in 2020.
In addition, Chinese suppliers are also rapidly helping Apple increase its production abroad. For example, in Vietnam, the number of Apple suppliers in Vietnam has increased from 14 at the beginning of the trade war in 2018 to 21 in 2020. Seven of these 21 companies are owned by China. These include AirPods assembler Luxshare Precision and Goertek, which have been producing wireless headsets in Vietnam since the beginning of 2020.
In the part of American manufacturers, Apple’s new suppliers include Universal Semiconductor, Viavi Solutions, which provides vertical cavity surface-emitting laser (VCSEL) components, and Cypress Semiconductor, which is acquired by Infineon, are removed. American Howe Technology (acquired by Weir shares), Kemei, Chemours (CC-US), Schindler Technology (TTMI-US), SiTime (SITM-US) and Coil Art.
In terms of Japanese manufacturers, SMK Group, Sharp Group subsidiary Kangdazhi, Japan Seiko, etc. were removed, while Toshiba was replaced by the split Kioxia, in addition, NGK Special Ceramics was included in the list of new suppliers. South Korean manufacturers added Samsung Electro-Mechanics, a supplier of RFPCB, and removed Interflex, a soft board manufacturer.
The rise of mainland Chinese enterprises has highlighted the trend of competition
Eric Tseng, chief analyst at Isaiah Research, said that cost and quality are the main reasons why Apple has persisted in the Chinese market despite political pressure. “We have not seen any obvious signs that due to geopolitical tensions or factors, Apple has reduced procurement and contacts with Chinese suppliers,” he said.
The Nikkei Asia Report also pointed out that Chinese suppliers have won orders by offering Apple a very low price that is unimaginable than suppliers in other countries. “They are willing to accept low-profit businesses that other suppliers are not willing to take over. In this way, they You can gradually upgrade through cooperation with Apple, and you can bid for more business next time.” An Apple supply chain manager said.
China’s ability to have a world-class supply chain for electronic components and assembly has actually benefited from years of cultivation by Chinese smartphone manufacturers such as Apple, Huawei and Oppo. Undoubtedly, the power of mainland China is rising, gradually replacing or catching up with other suppliers.
Let’s first look at the United States. As early as 2018, China surpassed the United States for the first time in the list of suppliers. The number of Apple suppliers in the United States dropped from 37 in 2017 to 32 last year. But one thing to be clear is that Apple still relies heavily on US suppliers such as the industrial group 3M, Intel, Micron, Qualcomm, Lumentum, and Skyworks Solutions, and most of these manufacturers are at the commanding heights of their industries and are difficult to replace.
This time, for the first time, mainland China surpassed Taiwan, China, which has been at the top of the list for more than a decade. In 2017, Apple had 52 suppliers in Taiwan, and 47 in 2018. In 2020, its 48 Apple suppliers make Taiwan the second largest supplier after China and Hong Kong. And some suppliers in Taiwan are facing the cannibalization and challenges of mainland suppliers. It is worth mentioning that Luxshare Precision.
In recent years, Luxshare Precision has gained a reputation for making Apple AirPods and has become a very well-known foundry for Apple. Inventec, an early AirPods assembler, has already acquired an important share of this business by Luxshare and GoerTek. Snatched away. After Quanta Computer withdrew from the Apple watch foundry business in 2019, Luxshare Precision was able to get a share. Existing Apple foundries such as Foxconn, Hon Hai Precision Industry and Pegatron are also facing potential competition from Luxshare Precision. In July last year, Luxshare Precision invested 600 million yuan to acquire an iPhone foundry from Wistron. After the transaction is completed, Luxshare Precision will become Apple’s first contract manufacturer in mainland China. Naturally, the shares of the two companies will be lost. Nibble away some.
Although from the perspective of overall competitive strength, Taiwan-based foundries have great advantages in the foundry experience and technical strength of Apple products, and mainland manufacturers are difficult to surpass in a short time, but Apple is willing to hand over some foundries to mainland foundries. To do it is also a recognition of the strength of mainland enterprises.
In addition, Luxshare Precision also controls Casetek Holdings, a subsidiary of Pegatron’s iPhone and MacBook metal frames and casings.
Japan and South Korea are naturally also experiencing competition from China. The number of Japanese suppliers dropped from 43 in 2017 and 38 in 2018 to 34. In the display field, Japan Display Inc. (JDI) and Sharp continue to be on the list, but both of them face competition from Chinese display manufacturers BOE and Tianma Microelectronics. As Apple has switched to OLED screens in recent years, the supply of JDI and Sharp to Apple has been drastically reduced.
Although JDI is the main screen supplier of the iPhone SE2, it has not achieved better profitability because of the huge sales of this phone. Especially after Apple switched to OLED screens, JDI’s performance, which missed the OLED outlet, was declining. The Baishan factory was sold to Sharp to repay Apple’s debt. Sharp, as Apple’s main supplier, is still reaping the benefits of survivors. Apple’s low-end machines use LCD screens. In the short term, the acquisition of the Hakusan factory can strengthen cooperation with Apple, but how much benefits it can enjoy in the medium and long term is still unknown. Japan Daiwa Securities analyst Rong Zheshi believes that “the peak period for the Hakusan factory to produce panels for iPhone is April to June 2021.”
In addition to the display screen, in terms of camera modules, Sharp’s Kantatsu also competes with Luxshare Precision and Cowell.
Interflex, South Korea’s largest soft board manufacturer, was removed and apparently replaced by a Chinese supplier.
What happened to the vendors that were kicked out?
Although entering Apple’s list of suppliers is a sign of corporate capabilities and can provide a stable source of income for many years, who knows the taste of being kicked out. Here, we focus on the analysis of several representative semiconductor companies.
In 2016, Apple removed German manufacturer Osram from its top 200 supplier list and added Philips to its supply chain. This was a huge blow to Osram, which had invested 1 billion euros (US$1.4 billion) to produce LEDs in a new factory in Malaysia at that time. Since then, Osram has experienced difficult years, and its earnings performance has not been optimistic. Until August 2019, ams decided to acquire Osram for 34 billion yuan, and the two complement each other. However, according to Digitimes reports, industry sources said that Osram Opto Semiconductors is expected to supply mini LEDs for backlighting for high-end MacBooks in the second half of 2021, becoming Apple’s second supplier of such chips after Taiwan Epistar.
In April 2017, Apple announced that it would stop using the GPU design of British Imagination within 15-24 months, and instead adopt its own designed products. As soon as the news came out, Imagination’s stock price plummeted by nearly 69% in an instant, and the decline was as high as 75% that day. In the following years, Imagination went through several twists and turns, selling its embedded processor business MIPS and mobile computing chip business Ensigma, and then “selling” to Canyon Bridge tragically. However, in the past few years, it has focused on the GPU business, and its PowerVR technology has performed well. Imagination relied on its excellent products to regain the attention of Apple, and in the end Apple continued its lead.
In the early years, Dialog, a veteran European company, became the fastest-growing European listed semiconductor company due to Apple’s popularity. DIalog has been working with Apple since 2007 when the first iPhone was released. But ten years later, on December 5, 2017, Dialog issued a statement that Apple had switched to independent research and development of power management chips. This statement caused Dialog’s share price to plummet by 23% that day. Fortunately, Dialog had been prepared for a long time, and won the power management chip market of many domestic mobile phone manufacturers early, and obtained investment from an investment institution under China’s Tsinghua Unisplendour Group, focusing on its layout in the Asia-Pacific region. And after being abandoned by Apple, Dialog began to self-help on a new track of the Internet of Things, and acquired a series of Internet of Things companies, the development of the past few years has gradually been on track.
Chinese manufacturer OFILM is also one of them. In July 2020, the Trump administration included the Chinese optical and optoelectronic component manufacturer OFILM Group on the entity list of 11 companies, and Apple therefore abandoned it. This action caused the market value of OFILM to plummet and lost more than 30 billion. It is understood that OFILM provides not only touch modules for Apple (for iPad), but also optical products for Apple (for mobile phone cameras). Since then, Lens Technology has taken over most of OFILM’s orders. All iPad touch screen orders were returned to Taiwan suppliers GIS and TPK. OFILM, GIS, and TPK have been providing touch modules for low-cost versions of Apple’s iPad, and these three companies have similar supply shares.
In order to save itself, OFILM sold 100% equity of its subsidiary Guangzhou Delta Imaging Technology Co., Ltd. and related equipment owned by Jiangxi Jingrun Optical Co., Ltd. to Wingtech in March this year. On June 1, OFILM announced the completion of the delivery with Wingtech. The industry believes that after the completion of the delivery, Wingtech is expected to enter Apple’s supply chain again.
In short, these companies have all eased after several layers of peeling. In the past few years, the mainland’s semiconductor strength has begun to rise, and it has gradually gained Apple’s favor. “I have never seen newcomers smile, who would like to hear old people cry”, but while we are developing, we must not forget to review these lessons from time to time.
Concluding remarks
It is not easy to become an Apple supplier, but becoming a non-Apple supplier is overnight. New companies come in and the original company is kicked out of the game will continue to be staged. Large companies will have to undergo a few years of reincarnation before they can alleviate it. Small companies are estimated to have no bones left. Just like the semiconductor boss Intel, somersaults on baseband chips, making Apple go back and forth between Intel and Qualcomm, Apple’s independent control (especially the release of the M1 chip) has also brought a potential crisis to Intel.
We are very happy to see mainland enterprises gradually ascend to the stage of history, but under the current situation, it is difficult to eat a new trick. Enterprises either need multiple carriages to drive side by side, or achieve the ultimate in the industry so that others cannot surpass you. Not abandoned by the times, not replaced by other companies.
Original Title: Mainland Chinese Enterprises Going to the “Sacred Altar” of Apple Suppliers
Article source:[WeChat public account: Semiconductor Technology Review]Welcome to add attention! Please indicate the source for reprinting the article.
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