Manufacturing Dive reached out to Venture Outsource management consultant Mark Zetter about Apple’s shifting China strategy and what it could mean for the manufacturing industry. Below are full responses to several questions exchanged by email.
Manufacturing Dive: What does it say about China’s current role as a hub for contract electronics manufacturing?
Zetter: China’s changing role as best-in-class hub for contract electronics manufacturing has nothing to do with capability. Changes on the horizon have more to do with the broader, political narrative being implemented by Western policy makers.
MD: How long do you think it will take Apple to move the entirety of its manufacturing base out of China?
Zetter: To relocate Apple’s current China manufacturing supply base elsewhere – and match Apple’s pre-Covid China capabilities pre-lockdown – there are limited options for various reasons and doing so will require support and input from international and regional industry organizations, governments, private sector vendors and suppliers, and universities and technology and research centers. It will take several years for Apple to build a similar supply chain ecosystem.
MD: Is such a goal ultimately realistic?
Zetter: The largest contract electronics manufacturing services (EMS) provider, or original design manufacturing (ODM) factories, in China serving Apple in terms of staffing numbers, production throughput volumes and factory square footage are owned by Taiwanese ODM provider Hon Hai (Foxconn), known for its tremendous capacity and large numbers of workers and assemblers capable of delicate, manual dexterity.
Foxconn and other manufacturers have been taking steps toward robotics automation and ‘lights out’ manufacturing but this takes time and not every production factory process and activity can be automated, and no nation has yet proven it can scale consumer electronics production against the quality- and technical-level for a disciplined workforce like China has accomplished.
India has a large population but many workers are low-skilled and India lacks adequate infrastructure and scale: roads, lots of uninterrupted and reliable commercial power, shallow supplier ecosystem depth and limited scope…plus India can be hit and miss when reliable quality and fast delivery are both required at scale.
To emphasize Indian electronics industry ecosystem challenges, India still does not have a commercial fab despite many attempts – although Foxconn signed a deal late 2022 for a semiconductor factory in Gujarat.
MD: What do you expect the wider impact of Apple’s decision to be on the electronics manufacturing industry?
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