SUPPLY: Apple (AAPL) is world’s largest market cap stock, makes 60% its $400 billion sales outside US, and has one of the world’s biggest supply chains. It has long published its supplier list and a responsibility report as part of its ESG efforts (helping give an above average score on our recently launched metrics). It leads change in supply chains but also shows the limits. It has consolidated and diversified its factories. Slashing China but also US exposure. In favour of the rest of Asia, but not Mexico or India. Even as China’s global manufacturing share keeps rising.
APPLE: We compare number and location of factories in its supply chain, from Amkor (AMKR) to Western Digital (WDC) over past five years (see chart). It has slashed the number in China, from 46% of total to 32%. But this has not been re-shored to US, where only 11% of factories are now located. This is down from 18% five years ago. The rest of Asia has been the big diversification winner, led by Taiwan, Japan, Korea, and across ASEAN economies. Perceived reshoring ‘hot spots’ Mexico and India are very small. Its supply chain has consolidated, with the number of factories falling fast from near 800 down to 500 even as sales grew 50% since 2017.
CHINA: This comes as global trade pressures mount with volumes slowing and protectionism rising. This has offset the sharp fall in global supply chain disruptions as the pandemic eased. But China is not giving up its position as the ‘world’s factory’ easily, accounting for 30% of the global total. This is up 5pp last five years alone and near double the number two US, as global goods demand soared and it benefited from its huge economies of scale. Yet, as structural and cyclical trade pressures mount China will likely focus more on building domestic consumption.
All data, figures & charts are valid as of 30/11/2022