Even with Trump moving out and Biden moving in, Apple’s supply chain may remain moored in China for some time
Cook also has Apple trying to persuade the U.S. government to give tax breaks to foundries willing to produce chips in the states. The world’s largest foundry, TSMC, of which Apple is the largest customer, is building a fab in Arizona which will produce integrated circuits for smaller tech firms than Apple using a process node that will be one or two generations behind. Still, this is a good start and surely the U.S. tech industry would really love to see the states eventually become one of the top countries when it comes to chip production.
One country whose supply chain has been hurt under the Trump administration is strangely the U.S. Somehow lost in the placement of Huawei on the Entity List last year, which banned the manufacturer from accessing its U.S. supply chain, is that the move cost American companies millions and millions of dollars. So in trying to punish Huawei and China, the U.S. government was actually hurting itself.
The problem with moving a supply chain or rebuilding one in a new country is that the members of the chain must be able to deliver parts in the quantity and quality that big tech players like Apple need. And something like that doesn’t happen overnight. Foxconn Chairman Young Liu noted that it took Apple’s leading supply chain member 30 years to build up its operations in China. Young points out that the countries being discussed as replacements for China are not going to be able to put up a supply chain overnight. Making a move like the one that Apple, other tech firms, assemblers, and supply chain members want to accomplish will take time. Gavekal analyst Wang added that because of the time required to build a quality supply chain “China will remain a major electronics manufacturing hub for at least the next five years.”