China has officially overtaken Taiwan as primary supplier nation to Apple.
According to Nikkei, the world’s most valuable tech company’s supplier list for fiscal year 2020, just released, shows that 51 of its top suppliers were based in China or Hong Kong.
Despite the ongoing trade war with the US and talk of economic decoupling, China’s importance in the global tech supply chain keeps growing.
China now boasts more Apple suppliers than any other country, a sign that Washington’s attempt to untangle U.S. and Chinese supply chains has had little impact on the world’s most valuable tech company.
Of Apple’s top 200 suppliers in 2020, 51 were based in China, including Hong Kong, according to a Nikkei Asia analysis of the Apple Supplier List released last week, up from 42 in 2018 and knocking Taiwan out of the top spot for the first time ever. Apple did not release data for 2019.
Chinese suppliers have also helped Apple build production capacity in other Asian countries as part of the company’s strategy to diversify its supply chain.
As the report notes, Apple’s disclosures do not cover procurement value and money spent with each company, so the analysis represents a geographical spread of suppliers rather than reflecting the economic value of any of the relationships.
One Apple supply chain manager told the outlet that “most Chinese suppliers have very similar approaches,” offering “very low prices” that suppliers in other countries “find hard to imagine.”
“They are willing to take low-margin businesses that other suppliers are reluctant to pick up,” the manager said. “This way, they could gradually level up by working with Apple and can later bid for more business the next time.”
The report notes China is also driving production beyond its shores, with companies like Luxshare Precision Industry and Goertek expanding into Vietnam, which grew from 14 companies on the list in 2018 to 21 this year.
Taiwan, which held the top spot on the list for more than a decade, is losing ground. Its 48 Apple suppliers in 2020 made the island the second-largest group after China and Hong Kong, but that represents a drop from 52 suppliers in 2017. The number was 47 in 2018.