Apple has kept expanding the presence of China partners in the supply chains for iPhone, iPad and MacBook devices seeking to effectively reduce production cost, prompting Taiwan supply chain players to develop new businesses, scramble for patronage from potential China customers, and even expand production capacity to directly meet competition from China rivals, according to industry sources.
With their excellent manufacturing capabilities, many Taiwan suppliers used to rely on Apple orders to support their revenue increases and outperform China counterparts. But Apple has changed its marketing strategies in recent years and started to introduce more China makers into its supply chains, as the US vendor has no longer stuck to top consumer groups for sales of its devices, becoming more concerned about production costs, the sources said.
The sources continued that the manufacturing plants operated by Taiwan investors in China have provided the best supply chain production management model for China suppliers of electronics components, many of whose founders used to serve at the plants. These China makers have in turn become strong competitors for Taiwan businesses with operations there, forcing the latter to take diverse countermeasures.
Taiwan-based battery module maker Simplo Technology, for instance, has moved to develop and produce batteries for electric bikes and spare battery modules for datacenters in the wake of Apple releasing most of its orders for MacBook and iPhone battery modules to China’s Desay Battery Technology and Sunwoda Electronic in the past few years. Now Simplo has become the world’s second-largest supplier of electric bike battery modules.
While unable to compete favorably in production cost, some Taiwan makers including metal chassis maker Catcher Technology have managed to land orders from China brand vendors of high-end devices following Apple switching part of MacBook metal chassis orders to China’s Everwin Precision Technology. Catcher chairman Allen Hung said that as metal chassis production involves high capital expenditure and sophisticated technology, the threshold for entering the sector is quite high, and therefore he sees few competitors able to pose threats to Catcher.
Meanwhile, Inventec Appliances under the Investec Group has chosen to directly face competition from China counterparts, planning to complete capacity expansions at its plants in China’s Nanjing and Shanghai by the end of 2018 and seeking to thwart China competitors with better product quality and production efficiency, company president David Ho indicated.