For the first time, Apple will make some of its flagship phones outside of China, a small but significant change for a company that has built one of the most sophisticated supply chains in the world with the help of the Chinese authorities. The development of the iPhone 14 shows how difficult it will be for Apple to extricate itself from China.
For the 15th year of its marquee device, Apple's Chinese employees and suppliers contributed complex work and sophisticated components, according to four people familiar with the new operations and analysts. The creation of both China and California has resulted in the creation of a product that is a creation of both countries.
A new level of involvement for Chinese engineers in the development of iPhones is reflected in the critical work that China provides. Engineers and suppliers have moved up the supply chain to claim a bigger slice of the money that U.S. companies spend to create high-tech gadgets after the country lured companies to its factories with legions of low-priced workers.
The increased responsibilities that China has assumed for the iPhone could challenge Apple's efforts to decrease its dependency on the country.
Apple plans to make some of its products in India, but Chinese companies will still be involved. Two people familiar with the situation say that the assembly of the device will be done in Chennai, India, with support from nearby Chinese suppliers. The BYD is setting up operations to cut glass for displays.
The managing partner of a technology research firm said that it was a difficult road to go down. They rely on China for a lot.
Apple didn't want to say anything. The companies didn't reply to requests for comment.
There have been covid-related disruptions. When China closed its borders in 2020, Apple had to change its operations and stop flying engineers from California to China to design the assembly process for its flagship phones.
Four people familiar with the operations say that Apple began empowering and hiring more Chinese engineers in Shenzhen and Shanghai to lead critical design elements for its best-selling product.
The company held late-night video calls with counterparts in Asia. Apple tried to encourage its staff to return to China by giving them a stipend of $1,000 a day for two weeks and four weeks of work, these people said. Many engineers were hesitant to leave because of the uncertainty over how long they would have to stay.
The company has encouraged staff in Asia to lead meetings that colleagues in California used to lead. The staff was responsible for the selection of some Asian suppliers.
These people said that the company is increasingly using China to get high- wage workers to do these jobs. According to Global Data, Apple has posted more jobs in China this year than it did in all of 2020. The people said that many of the new hires are Western educated.
There has been a change in the way Apple works. Over a decade ago, China's contribution to the production of an Apple product was insignificant. The low- wage workers who assembled the device were mostly from the United States, Japan and South Korea. According to a study by Yuqing Xing, an economics professor at the National Graduate Institute for Policy Studies in Tokyo, the work accounted for about $6.
Suppliers from around the world started to be displaced by China. Chinese companies began making things like speakers and batteries. The suppliers account for more than 25% of the value of an Apple product.
Dan Wang is an analyst with Gavekal Dragonomics, an independent economic research firm. He said that the trend is still going strong.
China has rewarded Apple for its dependence on the country. As other countries shut down for periods in 2020 and 2021, Apple was able to increase its smartphone market share and sell its most iPhones ever.
Analysts think that Apple will release four smaller models of its flagship phone this year. It is releasing the phones a week earlier than usual in order to boost revenue. The higher costs of some components will lead to an increase in the price of the iPhone 14 Pro model.
The success of the past years is expected to continue with the new iPhones. According to a financial firm, Apple has ordered suppliers to make more phones than it did a year ago.
The increased manufacturing order is a testament to the resilience of Apple's affluent customers, whose deep pockets allow them to buy high-priced phones despite the economic downturn.
A tech analyst said there was a huge wealth gap in consumer spending. Apple is safe compared to its competitors.
When the news media and employees gather at the company's headquarters in Cupertino, Calif., for the product's debut, Apple will accentuate the phone's abilities There are no signs of change in the flights coming and going from San Francisco International Airport.
According to a United promotional banner, Apple spent $150 million a year on flights with the airline. People who worked at Apple filled business class seats on flights to China and Hong Kong before the swine flu hit.
Direct flights from San Francisco to Hong Kong have stopped being offered by United. Four days a week, it flies directly to Shanghai.
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