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The daily tangle of trucks and buses jostling to get off Vietnam’s Highway 17 — a key artery to one of the world’s newest electronics hubs — begins forming at dawn. Just a couple of miles away, hordes of tired-looking night workers are shuffling out of a device factory and a recruiter with a bullhorn is barking instructions at a crowd outside another facility. These fresh high-school grads are looking for work with Apple’s biggest supplier, Foxconn Technology Group.
“We have about 150 to 200 people here today and almost all of them will get a job,” another hiring agent said. Unless, he added matter-of-factly, something was seriously amiss.
The tumult in Bac Ninh province is a byproduct of profound changes sweeping the global electronics industry, and Apple’s $3 trillion empire in particular, as the US campaign to curb China’s technological rise accelerates major industry players’ shift towards other parts of Asia.
A recruitment agent instructs workers in Que Vo District, Bac Ninh on July 13, 2023. Foxconn has dormitories for staff working on Apple devices in the province. Photographer: Linh Pham/Bloomberg
It’s a splintering of the global supply chain that threatens to push up prices for Apple’s vast consumer base, as producers, shippers and brands grapple with manufacturing in less established locales and managing multiple entry and exit points. High-end models are the most likely to become more expensive to make.
Data compiled by Bloomberg on more than 370 suppliers and their factory locations reveals which of Apple’s manufacturing partners are building new capacity and where. The result is the clearest picture yet of all the ways the Cupertino, California-based company’s network of producers increasingly crisscrosses the developing world.
Average Number of Operating Countries per Apple Supplier
*No data available for 2019 as Apple didn’t release a supplier list
Vietnam and India are the biggest winners, with smaller production hot spots appearing elsewhere in Asia. Producers from the US and Japan have reduced their footprint in China, even as Chinese firms join the supplier list at a rapid clip. China still houses the majority of Apple’s device-making factories, and will remain an integral part of the company’s supply chain. But the shift to a more diffuse production network is undeniable and accelerating.
“Apple is the bellwether,” said Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology.
“Apple is one of the largest assemblers of electronics in the world. It is also the most profitable. So it has a lot of weight to throw around when it comes to demands to suppliers and the way they operate.”
Historic Shift
The tariffs war sparked during Donald Trump’s presidency dramatically escalated Apple’s shift out of China. But the groundwork was laid long before that.
Many companies started looking for new manufacturing locations when China’s rapid economic growth began to push wages up. Governments in India, Vietnam and elsewhere aggressively chased their business, offering investment incentives, reforming wages and improving infrastructure.
Apple and businesses like it now funnel billions of dollars in investment to these corners of the globe.
In 2012, no Apple-related suppliers operated out of India; now, the country is home to 14. The new iPhone 15 will be the first model to ship directly from India just weeks after it starts leaving factories in China.
Vietnam has seen a fourfold increase in companies assembling Apple products over the past decade. The US housed fewer suppliers in 2022 than a decade earlier, but has scored some major investments too — chipmaker Taiwan Semiconductor Manufacturing Co. has pledged $40 billion for two advanced fabrication plants in Arizona, the first of which is expected to come online in 2025.
Six of Apple’s top 10 suppliers have factories in Vietnam and/or in India
Locations with at least one factory supplying Apple
Pegatron
Headquarters | Taiwan
LG Innotek
Headquarters | S. Korea
Foxconn
Headquarters | Taiwan
LG Display
Headquarters | S. Korea
Luxshare Precision
Headquarters | China
Samsung Electronics
Headquarters | S. Korea
Qualcomm
Headquarters | US
Broadcom
Headquarters | US
Quanta Computer
Headquarters | Taiwan
TSMC
Headquarters | Taiwan
Six of Apple’s top 10 suppliers have factories in Vietnam and/or in India
Locations with at least one factory supplying Apple
Samsung Electronics
Headquarters | S. Korea
Foxconn
Headquarters | Taiwan
LG Innotek
Headquarters | S. Korea
Luxshare Precision
Headquarters | China
LG Display
Headquarters | S. Korea
Pegatron
Headquarters | Taiwan
Qualcomm
Headquarters | US
Quanta Computer
Headquarters | Taiwan
TSMC
Headquarters | Taiwan
Broadcom
Headquarters | US
Six of Apple’s top 10 suppliers have factories in Vietnam and/or in India
Locations with at least one factory supplying Apple
Samsung Electronics
Headquarters | S. Korea
50% of Apple’s spending*
Foxconn
Headquarters | Taiwan
LG Innotek
Headquarters | S. Korea
Luxshare Precision
Headquarters | China
LG Display
Headquarters | S. Korea
Pegatron
Headquarters | Taiwan
Quanta Computer
Headquarters | Taiwan
Qualcomm
Headquarters | US
TSMC
Headquarters | Taiwan
Broadcom
Headquarters | US
Six of Apple’s top 10 suppliers have factories
in Vietnam and/or in India
Locations with at least one factory supplying Apple
Foxconn
Headquarters | Taiwan
50%
of Apple’s spending*
Luxshare Precision
Headquarters | China
Pegatron
Headquarters | Taiwan
Samsung Electronics
Headquarters | South Korea
LG Innotek
Headquarters | South Korea
LG Display
Headquarters | South Korea
*Each supplier’s estimated share in Apple’s cost of goods sold. Figures don’t add up to 100% due to companies’ different reporting periods. Data include latest available between 2021 and 2023.
The historic shift promises to create millions of jobs beyond China. In Vietnam, the electronics workforce reached 1.3 million in June 2022, a quadrupling since 2013. In India, the sector has created up to a million direct and indirect jobs since 2018, the Indian Cellular and Electronics Association estimates.
“The supply chain realignment does really offer significant opportunities for companies that are part of that movement, but also geographies,” said Jeffrey Jaensubhakij, chief investment officer at Singapore sovereign wealth fund GIC Pte, sketching out a general industry picture.
But scattering production across several countries — some of which lag China by far in terms of infrastructure, labor availability and general supply chain expertise — raises the risk of shipping delays and inflated costs.
“The challenge coming from that is that you will fragment what are already very efficient supply chains,” Jaensubhakij said. “It will increase costs and therefore continue to push up inflation over time.”
Apple’s new manufacturing hubs still account for a relatively small chunk of overall production. Exactly how consumer prices will shake out is still not clear, and a company spokesman declined to comment.
“The price of Apple products could indeed increase to reflect the potentially higher costs” of supply chain migration, said Bloomberg Intelligence’s Steven Tseng. “That said, it’s possible that such cost hikes may not be fully reflected in the final prices, as that could hurt the market demand.”
And while China has advantages that India won’t be able to match in the immediate future, Veena Jha, chief executive officer of IKDHVAJ Advisers, doesn’t expect the retail cost of an iPhone to change much.
“What we might see is that higher-end models are initially more expensive due to sophisticated parts or designs,” she said. “In the longer run, there should be price parity with China.”
Of course, remaining heavily reliant on China comes with its own set of risks.
During the Covid Zero years, Beijing’s volatile policies choked off the supply of everything from phones to cars. At Foxconn’s iPhone City — a sprawling complex in central China where hundreds of thousands of workers endured lengthy lockdowns — violent upheaval late last year curtailed operations for weeks and may have been the last straw for producers.
And Joe Biden’s administration is now restricting China’s access to advanced US technology such as chips, intensifying the tit-for-tat sparring between the world’s two biggest economies. That stance has wide bipartisan support in Washington, DC, from policy makers who fear Chinese advancements in artificial intelligence and quantum computing create a challenge to America’s military interests — including in a potential conflict over Taiwan.
Investing Billions
The Taiwanese assemblers that dominate Apple’s supply chain still do most of their work in giant complexes in mainland China. But they are also behind the majority of overseas buildup. Vietnam was an early beneficiary of their diversification, although Foxconn and Pegatron Corp. are also planning major investments in India.
In the rice fields of Bac Giang, a billion-dollar Foxconn complex expected to eventually churn out MacBooks is rising up on a plot the size of 93 American football fields. Such big investments create an economic ripple effect: Apple’s list includes 25 suppliers in the country, but more than 300 subcontractors have also opened factories in Bac Giang alone, according to Dao Xuan Cuong, who oversees the province’s industrial parks.
Foxconn and Luxshare factories in Viet Yen District, Bac Giang Province on June 17, 2023. Photographer: Linh Pham/Bloomberg
Chinese companies like AirPods maker GoerTek Inc. and BYD Co., which operates an iPad assembly plant, are expanding in northern Vietnam too. That’s a reflection of the realities facing Chinese and US firms alike: As Washington seeks to contain Beijing’s technological ambitions, it pays to set up manufacturing in locales mostly free of those geopolitical constraints.
Vietnam has lured tech manufacturers to the country with tax breaks and free land leases. Provincial officials also give Apple personal attention, conducting night calls with Cupertino and providing land for factory workers’ dormitories.
All this effort is having the desired effect. The electronics industry powered 32% of Vietnam’s exports last year, about twice as much as a decade ago.
“Economically, this is a potential growth driver that no country can really afford to miss,” said Sonal Varma, an economist with Nomura Holdings Inc. “It’s a once-in-a-lifetime opportunity.”
Just the Start
India is placing Apple at the heart of its ambitions to become a second China — a manufacturing powerhouse with a giant domestic market to boot.
Earlier this year, Apple Chief Executive Officer Tim Cook reiterated a pledge to invest in the world’s most populous nation during a meeting with Narendra Modi. The Indian prime minister is doing his part to encourage the relationship, with financial incentives for suppliers and steep import tariffs for companies that don’t produce locally.
The country now manufactures roughly 7% of all iPhones, tripling production in the last fiscal year. Overall, Indian electronics exports have quadrupled since 2018 to $24 billion last year.
Tim Cook, center right, shakes hands with a customer at the opening of India’s first Apple store on April 18, 2023. Photographer: Indranil Aditya/Bloomberg
All signs indicate this is just the start. Tata Group, India’s largest conglomerate, is acquiring an iPhone factory from Taiwanese assembler Wistron Corp. — likely the first step in the industrial firm’s effort to become a bona fide electronics giant. Foxconn in August unveiled plans to set up a factory making iPhone components in southern Karnataka province. It’s also prepping a larger facility that will eventually assemble top-of-the-line Apple devices. That overall ambition takes its new investments in India north of $1.2 billion, and could create tens of thousands of jobs.
India’s Growing Electronics Industry
Note: India fiscal year ending in March Source: India Cellular and Electronics Association
These projects are unlikely to be snag-free, though. Basic services such as power and water are less reliable in India and Vietnam than in China, and Apple’s own supply-chain ecosystem is less established. Manufacturers often want to bring in experienced Chinese managers to set up new factories, but the pace of visa approvals — especially in India, where tensions with China are rising — can limit expansion.
Still, many observers are optimistic. “India is now comprehensively addressing all its legacy bottlenecks linked to factors of industrial production,” Bank of America Corp. analysts led by Amish Shah wrote in June, adding that the country “is focusing on improving ease of doing business.”
Manufacturing Juggernaut
China isn’t going to lose its standing as the world’s main production hub for devices any time soon.
Suppliers are certainly reducing their presence there, with American and Japanese companies such as Dell Technologies Inc., HP Inc. and Sony Group Corp. leading the charge. Even Chinese companies like Luxshare Precision Industry Co. — the youngest member of the select cohort deemed worthy of assembling iPhones — are now building factories outside of their home country.
But at the same time, Chinese firms producing everything from displays and casings to circuit boards and batteries are joining Apple’s supplier list. Semiconductors are the only sphere where China is underrepresented, due to a lack of expertise in memory and processing.
Apple Suppliers Operating in Mainland China, by Headquarter Location
For years, industry luminaries from Foxconn impresario Terry Gou to TSMC founder Morris Chang have warned that the global tech supply chain is at risk of fragmenting along US-China fault lines.
But replicating a manufacturing juggernaut that spans thousands of companies, millions of workers and connects to all points on the globe simply isn’t feasible in the short run.
Vast factories like Foxconn’s iPhone City are able to operate at such mind-boggling scale in large part because of generous incentives and unflagging support from Chinese local governments. It will be challenging to replace these city-sized facilities, said Chip War author Miller, who is also a historian at the Fletcher School of Law and Diplomacy at Tufts University.
Ultimately though, a greater proportion of Apple’s capacity is going to be situated outside of China.
The velocity and extent of that migration isn’t yet clear, but the overall trend is welcome news for many bureaucrats and politicians half a world away from Apple’s Californian headquarters.
In Bac Giang, the cacophony of construction work and adverts for Chinese, Japanese and Korean language lessons are inescapable signs of change.
Local official Dao Xuan Cuong personally toured manufacturers during a trip to China this year.
“Some of them told me that they aim to move 30% to 50% of their production to somewhere outside of China,” he said, his two smartphones incessantly ringing and pinging.
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