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Apple: Things are changing in China

A few weeks ago Apple announced that production of the iPhone would be shifting out of China in a roundabout way -- in essence Apple announce that 10% of iPhone production was now assembled in India, doubling the Indian output.

A few days ago, one of Apple's main China partners (Taiwanese-based) Wistron shut down its largest assembly Chinese-based assembly plant.  As of May 15, there are only two employees left on site and all the assembly equipment has already been removed.  The plant was shut down permanently on April 26.  Many Chinese lost their well-paying jobs and this will impact the city as a whole.  BTW the Taiwanese's contract had been up since the beginning of 2023, and there were issues that Wistron and Apple seemed to be unable to resolve -- in addition, the Biden's administration recent ruling made the sale of certain equipment to China impossible -- it is unclear if these new rules played a role in the non-renewal of the contract with Wistron

In addition to the widely reported increase in Indian iPhone production little has been said about the rise of Vietnam as an assembly site for the iPhone.  It seems few want to discuss this.

For Apple the issue was threefold:  (1) finding qualified workers to assemble its telephones, (2) wages in China have been rising very quickly, over the past decade wages have risen nearly 14-fold, and (3) the Chinese response to the pandemic has been clumsy and generally counterproductive therefore substantially damaging Apple's delivery logistics.  Individually, these problems were manageable - with increased automation, but all three together were a game-stopper for the company.  Vietnam's and India's solutions became attractive alternatives (in addition to increased automation).  

For the past few years, China's tone vis-a-vis the US has become increasingly harsh, mostly for internal political reasons the CCP has been acting as if it was equal to the US in its military might and trading acumen.  First, China is very dependent on the export markets of the US and Europe, which is fine, but China relied on PAX America to control free trade across the world, and more specifically oil trade where America has no need for such products (the USA is now self-sufficient in oil).  It is evident that America has lost interest in being the policeman of the world.

The make-up of the USA force projection fleet is indicative of a war-driven makeup instead of a peacekeeping mission.  The world has failed to notice that America's Navy is now made of 14 carrier groups with only 70 frigates, This is not a new phenomenon, but a doctrinal shift when Trump told Europe that it had to meet the burden of its own defense, he was bluntly saying what Bush and Obama had said quietly.  Germany, Belgium, Netherlands, Spain, and  Portugal told America to F-off, and the French and the Brits started re-arming...  America has no interest in being the policeman of the world, and its force deployment strength is no longer able to meet that requirement.  BTW by 2030, the number of Frigates and destroyers will have shrunk by half.  The other half is needed to provide carrier group security.

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