Apple is the leader in smartphone sales in the world by a large margin. Samsung is its only major competitor. While the iPhone 14’s sales have not been on fire, they have been steady and have kept Apple’s technology advantage at the vanguard of the industry. The threat to Apple’s success is something it cannot control. Its supply chain, which starts primarily in China, is falling apart.
The first challenge to iPhone manufacturing was that the Chinese shut down part of Foxconn’s manufacturing facilities because of its aggressive attempt to eliminate the spread of Covid-19. More recently, workers have clashed with police. Foxconn is Apple’s largest manufacturing facility in the world.
The worker protest is at a major Foxconn facility which, according to the FT, has 200,000 laborers. According to the paper, “Violent worker protests have erupted at the world’s largest iPhone factory in central China as authorities at the Foxconn plant struggle to contain a Covid-19 outbreak while maintaining production ahead of the peak holiday season.” Most of the protests have been caused by aggressive government Covid-19 testing.
The Foxconn problem shows how vulnerable the invulnerable Apple is. Apple may have the best product, the most demand for smartphones, the best brand, and the strongest management in the tech world. However, its Achilles’ heel is that it concentrated manufacturing in China because labor is cheap, which helps Apple’s extraordinary gross margins. These margins are the envy of the industry. Apple has not tried to put a large portion of its manufacturing outside China. This was an ingenious approach until it was not.
Get Our Free Investment Newsletter
A large number of industries face supply problems. Some of these are domestic, primarily. The food industry is an example. Grains, eggs, and milk are shipped to food manufacturers. Problems with fuel and transportation bottlenecks have triggered shortages that have made prices surge.
Apple does not have a domestic problem. Its overseas issue is harder to solve. Apple cannot influence the Chinese government. That means the iPhone shortage could last for weeks. In the meantime, millions of phones Apple might sell won’t be sold during the important holiday sales season.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Source: Read Full Article
Consultancy firm ThoughtWorks' parent company confidentially files for U.S. IPO
Egyptian feminist and author el-Saadawi dies at 89
Ethiopian government says troops take two towns from Tigray fighters
Comcast CEO Brian Roberts urged to probe NBC News’ ‘culture of widespread sexual harassment’
Airbnb valued at $101.6 billion in biggest U.S. IPO of 2020