Apple's iPhone factory shift has left a ghost town behind in China

[Fred Chen]

Apple's supply chain move out of China leaves deserted Foxconn factories

Foxconn is closing factories in China as iPhone production moves elsewhere, and impacts beyond industry have been made crystal clear in a new video.

appleinsider.com

Foxconn is closing factories in China as iPhone production moves elsewhere, and impacts beyond industry have been made crystal clear in a new video.


Apple has long operated its production in China, but in recent years it has been shifting away. Production in India and Vietnam is growing, with fewer products being shipped out of China.

In a China Observer report released on Monday, footage of a Foxconn industrial park in Nanning is shown to be deserted. Once employing 50,000 people, it's now practically an empty shell. AppleInsider has learned that as Apple's operations have moved elsewhere, manufacturing capacity was freed elsewhere in China, leading to this plant's closure.

A local man told the report the plant required massive resources to go with its 50,000 employees. This included 60 tons of rice per day, as well as 280 pigs, 1.2 million eggs, and 80,000 chickens.

As well as the ghost town footage of the facility itself, the effects of the China exodus affected other nearby areas. Nearby skyscrapers built to house workers for the facility are struggling to make sales, even with steep discounts.

There isn't much hope to locals that Foxconn will be using the operation again anytime soon, as signs have been taken down. It is believed that only a few buildings are being actively used by Foxconn, with the vast majority either vacant or rented out.

The facility rot and abandonment is certainly a sign that Foxconn made changes to its overall operations. Especially since Apple is keen to shift production away from a China-centric system to one more distributed.

Some of its overseas operations have even benefited from the closure. Report sources say equipment from the facilities were taken to similar factories in Vietnam.

For local communities, the closure demonstrates how much wealth Apple's production can bring to an area. It also shows how quickly it can go away, and without any other backup industries, how damaging the movements can be.

 

[blueone]

I hope Xi reads your post.

 

[tooLongInEDA]

Interesting that a company of the immense wealth of Apple apparently feels no sense of responsibility for any of this or takes any measures to help the locals adapt to the change. I'm happy to be corrected if this perception is wrong - but nothing in the article or anything I've seen says otherwise.

Behind a facade of being environmentally and socially responsible, this is the reality. We went through a period in the UK where lots of large factories closed in the 1980s. But those had employee counts in the low 1000s. 50,000 employees is beyond anything I can conceive.

Of course, it's all the subcontractor's [Foxconn] legal and ethical responsibility, isn't it ? Except Apple is forcing the change.

I don't expect this opinion to go down very well with all the Apple fans on this site. But I find something very distasteful about this sort of slash-and-burn capitalism. Ultimately not good for the US's reputation around the world.

 

[samwilde]

Nanning has close to 9 million people. While losing 50,000 jobs is significant it is not like you can say much of the income from making iPhones is spent in the local economy. It is well known that the manufacturing cost of an iPhone is like 4% of the total price.

The US government then decries China for a supposedly huge trade imbalance by counting the full price of the phones they import from China as if the profits and most of the income remained there. When the profits are funneled abroad and most of the components are imported into China from other places.

It was to be expected that as salaries in China rose production of manufactures which require low cost labor would move elsewhere. Even Mexico has lower labor costs than the coastal areas of China today.

Since most of the components to make the iPhones are made in the Far East, Vietnam is the most likely destination to manufacture these products cheaply.

 

[blueone]

Interesting that a company of the immense wealth of Apple apparently feels no sense of responsibility for any of this or takes any measures to help the locals adapt to the change. I'm happy to be corrected if this perception is wrong - but nothing in the article or anything I've seen says otherwise.

Behind a facade of being environmentally and socially responsible, this is the reality. We went through a period in the UK where lots of large factories closed in the 1980s. But those had employee counts in the low 1000s. 50,000 employees is beyond anything I can conceive.

Of course, it's all the subcontractor's [Foxconn] legal and ethical responsibility, isn't it ? Except Apple is forcing the change.

I don't expect this opinion to go down very well with all the Apple fans on this site. But I find something very distasteful about this sort of slash-and-burn capitalism. Ultimately not good for the US's reputation around the world.

Nanning has close to 9 million people. While losing 50,000 jobs is significant it is not like you can say much of the income from making iPhones is spent in the local economy. It is well known that the manufacturing cost of an iPhone is like 4% of the total price.

The US government then decries China for a supposedly huge trade imbalance by counting the full price of the phones they import from China as if the profits and most of the income remained there.

It was to be expected that as salaries in China rose production of manufactures which require lost cost labor would move elsewhere. Even Mexico has lower labor costs than the coastal areas of China today.

Since most of the components to make the iPhones are made in the Far East, Vietnam is the most likely destination to manufacture these products cheaply.

I think you both are misinterpreting Apple's intentions in moving some product assembly out of China. I think none of these moves have to do with lower costs. In fact I suspect their costs will be higher. There has been lots of discussion about why Apple is doing this, when in reality it is very inconvenient or risky for them. China has a manufacturing environment that at the scale Apple needs can't be replicated elsewhere. But China's policy decisions caused Apple serious inconvenience during the COVID pandemic, Apple feels caught in the middle of the US-China trade tensions, and Apple wanted to diversify its supply chains out of the geopolitical tensions regarding Taiwan. Also, Apple apparently wanted to expand its presence in India, where it feels the government is friendlier, though the challenges of creating mega-factories in India have been well-publicized. (Some pundits have speculated that Apple also wants the Made in India label for sales reasons in India. I can see the attraction.) Apple claims to be in the assembly diversification for the long run, and they have not left China, nor do they appear to intend to do so. Everything I read tells me China infrastructure advantages will take many years to equal in India or elsewhere.

As for the Foxconn site, Foxconn could have load-balanced the remaining work across other Chinese sites, but chose not to. Let's not forget, Foxconn (Hon Hai Technology Group) is not a Chinese company, it is a Taiwanese company, and I wonder if they would have been so heavy-handed if the plants affected were in Taiwan? American companies are pretty heavy-handed when moving operations in the US and Canada, such as Oracle's HQ moves from Redwood Shores to Austin and now to Nashville.

 

[soAsian]

The new Supply Chain trend is China + 1.

 

[tooLongInEDA]

I think you both are misinterpreting Apple's intentions in moving some product assembly out of China. I think none of these moves have to do with lower costs. In fact I suspect their costs will be higher. There has been lots of discussion about why Apple is doing this, when in reality it is very inconvenient or risky for them. China has a manufacturing environment that at the scale Apple needs can't be replicated elsewhere. But China's policy decisions caused Apple serious inconvenience during the COVID pandemic, Apple feels caught in the middle of the US-China trade tensions, and Apple wanted to diversify its supply chains out of the geopolitical tensions regarding Taiwan. Also, Apple apparently wanted to expand its presence in India, where it feels the government is friendlier, though the challenges of creating mega-factories in India have been well-publicized. (Some pundits have speculated that Apple also wants the Made in India label for sales reasons in India. I can see the attraction.) Apple claims to be in the assembly diversification for the long run, and they have not left China, nor do they appear to intend to do so. Everything I read tells me China infrastructure advantages will take many years to equal in India or elsewhere.

As for the Foxconn site, Foxconn could have load-balanced the remaining work across other Chinese sites, but chose not to. Let's not forget, Foxconn (Hon Hai Technology Group) is not a Chinese company, it is a Taiwanese company, and I wonder if they would have been so heavy-handed if the plants affected were in Taiwan? American companies are pretty heavy-handed when moving operations in the US and Canada, such as Oracle's HQ moves from Redwood Shores to Austin and now to Nashville.

You've missed my point entirely.

I'm not commenting on Apple's motives at all here or the geopolitics/business stuff.

I am commenting on whether Apple has any sense of responsibility for leaving a vast industrial wasteland behind them and whether they are - or are not - doing anything to help with the adjustment.

I'm also giving the opinion that a decision on this scale is not solely the responsibility of Foxconn and this will rightly or wrongly (I tend towards rightly) be seen as an Apple decision as much as a Foxconn one. Perceptions matter.

 

[blueone]

You've missed my point entirely.

Not at all. I simply didn't address your point to your satisfaction.

I'm not commenting on Apple's motives at all here or the geopolitics/business stuff.

I am commenting on whether Apple has any sense of responsibility for leaving a vast industrial wasteland behind them and whether they are - or are not - doing anything to help with the adjustment.

I'll be more succinct. I don't think this situation is Apple's responsibility, Foxconn's plant utilization is Foxconn's responsibility. And I don't think Foxconn minds this situation much, because Apple's manufacturing in India is also operated by Foxconn, and it looks like Foxconn views the move as a significant opportunity for them to get a leadership position in an up-and-coming manufacturing hub.

I'm also giving the opinion that a decision on this scale is not solely the responsibility of Foxconn and this will rightly or wrongly (I tend towards rightly) be seen as an Apple decision as much as a Foxconn one. Perceptions matter.

I doubt one out of ten thousand Apple customers are aware of this situation, or gave it a second thought even for the tiny number seeing the video. I suspect the tenor would be quite different if China was seen as a more positive force for good by western countries where Apple makes most of its sales. Geo-politics matter too, unfortunately. None of the people in China affected by Foxconn's action individually deserved any of this.

 

[Barnsley]

Interesting that a company of the immense wealth of Apple apparently feels no sense of responsibility for any of this or takes any measures to help the locals adapt to the change. I'm happy to be corrected if this perception is wrong - but nothing in the article or anything I've seen says otherwise.

Behind a facade of being environmentally and socially responsible, this is the reality. We went through a period in the UK where lots of large factories closed in the 1980s. But those had employee counts in the low 1000s. 50,000 employees is beyond anything I can conceive.

Of course, it's all the subcontractor's [Foxconn] legal and ethical responsibility, isn't it ? Except Apple is forcing the change.

I don't expect this opinion to go down very well with all the Apple fans on this site. But I find something very distasteful about this sort of slash-and-burn capitalism. Ultimately not good for the US's reputation around the world.

10s of 1000s of Jobs went in the 80s

Mining , Steel in fact anything that Thatcher ended up privatising impact businesses that supplied these industries.

Unemployment went to over 3M in a very short period of time "Thatcher Isn't Working". It was pretty brutal especially in areas where these blue collar factory jobs were.

Some places havent recovered fully, my old hometown is a good example , hardly anyone who live there work there anymore.

There are a lot of Vape shops though

 

[Barnsley]

I think you both are misinterpreting Apple's intentions in moving some product assembly out of China. I think none of these moves have to do with lower costs. In fact I suspect their costs will be higher. There has been lots of discussion about why Apple is doing this, when in reality it is very inconvenient or risky for them. China has a manufacturing environment that at the scale Apple needs can't be replicated elsewhere. But China's policy decisions caused Apple serious inconvenience during the COVID pandemic, Apple feels caught in the middle of the US-China trade tensions, and Apple wanted to diversify its supply chains out of the geopolitical tensions regarding Taiwan. Also, Apple apparently wanted to expand its presence in India, where it feels the government is friendlier, though the challenges of creating mega-factories in India have been well-publicized. (Some pundits have speculated that Apple also wants the Made in India label for sales reasons in India. I can see the attraction.) Apple claims to be in the assembly diversification for the long run, and they have not left China, nor do they appear to intend to do so. Everything I read tells me China infrastructure advantages will take many years to equal in India or elsewhere.

As for the Foxconn site, Foxconn could have load-balanced the remaining work across other Chinese sites, but chose not to. Let's not forget, Foxconn (Hon Hai Technology Group) is not a Chinese company, it is a Taiwanese company, and I wonder if they would have been so heavy-handed if the plants affected were in Taiwan? American companies are pretty heavy-handed when moving operations in the US and Canada, such as Oracle's HQ moves from Redwood Shores to Austin and now to Nashville.

India got some.very interesring policies when it comes to foreign companies selling product.

You better start maanufacturing here and creating jobs or we are gonna tax the bejesus out of you and make life very difficult for you.

Apple caved in and started some job creation there , whereby they source local materials otherwise it was NO Apple.stores for them.

Its why Musk was whining , I assume he gonna do some sort of manufacturing in India to get around Import taxes

 

[blueone]

India got some.very interesring policies when it comes to foreign companies selling product.

You better start maanufacturing here and creating jobs or we are gonna tax the bejesus out of you and make life very difficult for you.

Apple caved in and started some job creation there , whereby they source local materials otherwise it was NO Apple.stores for them.

Its why Musk was whining , I assume he gonna do some sort of manufacturing in India to get around Import taxes

Hmmm... I didn't know India had these coercive policies.

 

[Barnsley]

Hmmm... I didn't know India had these coercive policies.

They got 1Bn+ mouths to feed!

Would you let people come in and benefit from that without "benefitting" the nation as a whole?

 

[tooLongInEDA]

10s of 1000s of Jobs went in the 80s

Mining , Steel in fact anything that Thatcher ended up privatising impact businesses that supplied these industries.

Unemployment went to over 3M in a very short period of time "Thatcher Isn't Working". It was pretty brutal especially in areas where these blue collar factory jobs were.

Some places havent recovered fully, my old hometown is a good example , hardly anyone who live there work there anymore.

There are a lot of Vape shops though

Now I know why you're called Barnsley ... I'm close to Royston (but the soft southern one, not the Barnsley Royston).

You at least get my point. This is 50,000 direct employees. Plus their local supply chains. I think that's several times greater in local impact than anything in the UK in the 1980s.

Doesn't matter whether it's in China, India, Vietnam or anywhere else. People in these places never forget who did these things to them. And smarter people in Vietnam, India and similar countries will know they're no less at risk. It is not only the fact that these things happen (as they sometimes must), but *how they are done*.

 

[Barnsley]

Now I know why you're called Barnsley ... I'm close to Royston (but the soft southern one, not the Barnsley Royston).

You at least get my point. This is 50,000 direct employees. Plus their local supply chains. I think that's several times greater in local impact than anything in the UK in the 1980s.

Doesn't matter whether it's in China, India, Vietnam or anywhere else. People in these places never forget who did these things to them. And smarter people in Vietnam, India and similar countries will know they're no less at risk. It is not only the fact that these things happen (as they sometimes must), but *how they are done*.

Used to have some relatives lived in the real Royston , the smell from coking plant was quite sonething.

Had a friend at Uni whos parents lived in the "other" Royston of what you speak

I dont think there are two places in the world with same name but so different!!

The UK debacle is as you say not the same as swift movement of manufacturing from Country Area A to another Country.

Despite the image lots of empty factory lots here in Singapore after companies move on , the jobs not replaced like for like , those areas are dead

 

[MKWVentures]

Apple's supply chain move out of China leaves deserted Foxconn factories

Foxconn is closing factories in China as iPhone production moves elsewhere, and impacts beyond industry have been made crystal clear in a new video.

appleinsider.com

Foxconn is closing factories in China as iPhone production moves elsewhere, and impacts beyond industry have been made crystal clear in a new video.


Apple has long operated its production in China, but in recent years it has been shifting away. Production in India and Vietnam is growing, with fewer products being shipped out of China.

As much as I love political, sociology, and economic commentary on this site. Can I get some help on facts?

This plant is shutting down I guess. Is the production moving to another Foxconn site? In China? or another company. or another country.

I saw recent Apple supply chain numbers by country and company a couple months ago and the vast majority is still made in China, Not Vietnam or India. It will take 10 years to rebalance manufacturing capacity.

What are the numbers for % units in China and % Units in other countries in 2024.

 

[blueone]

As much as I love political, sociology, and economic commentary on this site. Can I get some help on facts?

This plant is shutting down I guess. Is the production moving to another Foxconn site? In China? or another company. or another country.

I saw recent Apple supply chain numbers by country and company a couple months ago and the vast majority is still made in China, Not Vietnam or India. It will take 10 years to rebalance manufacturing capacity.

What are the numbers for % units in China and % Units in other countries in 2024.

This article may help a little. India is getting the bulk of Apple diversifying iPhone manufacturing out of China. I think Apple has made it clear that China is still the best place for high volume manufacturing, but they need to have a more resilient supply chain.

https://www.cnbc.com/2024/04/10/apple-made-14-billion-worth-of-iphones-in-india-in-shift-from-china.html#:~:text=AFP%20%7C%20Getty%20Images-,Apple%20produced%20%2414%20billion%20worth%20of%20iPhones%20in%20India%20over,report%20from%20Bloomberg%20said%20Wednesday.

 

[adramtech]

50,000 employees need 80,000 chickens per day, and 24 eggs each. Okay

 

[Claudio DD]

50,000 employees need 80,000 chickens per day, and 24 eggs each. Okay

the most worrying part is the 1,2Kg of Rice per day, considering that with water it doubles that would be an amazing 2,4 Kg per day - at that points the eggs and the pork will just finish you off. Maybe it become a ghost town for over-eating, who knows