Apple's US Manufacturing Drive

Designed in California, Assembled in China

In 2016, the company published a book called “Designed by Apple in California,” with 450 images of Apple products, all designed in the Golden State.

But my MacBook also notes that it was “assembled in China,” and, in fact, the company remains hugely reliant on production of both components and finished goods manufactured in China and other Asian nations.

Nationalist Pride and New Partnerships

In the current climate of geopolitical tensions between the U.S. and China, and ongoing fears that China could one day move to take control of Taiwan, there is growing pressure on Apple to rely more on parts and manufacturing in the U.S.

And that helps explain Apple’s sudden burst of nationalist pride.

On Tuesday, Apple announced a new “multiyear, multibillion-dollar agreement” with the chip maker Broadcom, to develop 5G radio frequency components and other wireless connectivity components. That includes parts called FBAR filters—an acronym for “thin-film bulk acoustic resonators”—which are included in every smartphone. Apple said the FBAR filters “will be designed and built in several key American manufacturing and technology hubs, including Fort Collins, Colorado, where Broadcom has a major facility.”

Analyst Insights

Wedbush analyst Dan Ives said in an interview that this is obviously a “plant the flag” moment for Apple, in response to pressure to boost domestic sourcing.

Apple Supplier Relationship Insight

Broadcom: A Trusted Apple Supplier Broadcom has been a key Apple supplier for many years, reportedly providing FBAR filters to the tech giant. While Apple typically keeps such partnerships under wraps, Broadcom's contribution has been crucial behind the scenes.

Skyworks Solutions: An Indirect Apple Partner Skyworks Solutions, another radio chip provider, heavily relies on Apple for over half of its revenue. Despite this significant relationship, Skyworks carefully navigates around directly mentioning Apple, as seen in their recent earnings call statements.

Apple's Supplier Network

Every year, Apple releases a comprehensive list of its component suppliers. The most recent list, unveiled last fall, features over 180 companies that collectively represent 98% of Apple's spending on parts and manufacturing. Noteworthy is the increase in U.S.-based suppliers from the previous year, with 48 companies now having operations in the country.

Apple's Commitment to U.S. Manufacturing

Apple has been actively promoting U.S. manufacturing initiatives. In a move to boost domestic production, Apple announced a substantial investment of over $430 billion spread across five years. Additionally, awards from the "Advanced Manufacturing Fund" have been granted to companies like II-VI (now CoherentCorp) and Corning for innovative components and materials.

Satellite Technology Integration Apple's forward-looking approach includes integrating satellite-based emergency calling features into the iPhone 14, funded by a significant portion of the $450 million allocated from the Advanced Manufacturing Fund. Globalstar, a key satellite company, received the majority of this investment for the initiative.

In alignment with boosting American suppliers, data center expansions, and capital investments within the U.S., Apple remains committed to strengthening its domestic supply chain.

Apple chose not to provide further comments regarding these developments beyond its official press release. Broadcom Leads the Way

Broadcom shares are up 2.2% following a recent announcement, showing growth and potential in the market. On the other hand, competitors like Qualcomm (QCOM), Skyworks, and Qorvo (QRVO) have seen a slight decrease of 1% or less in their stocks. Apple shares are also down by 0.6%, reflecting a mixed response in the mobile phone components sector.

Looking Ahead

As the market continues to fluctuate, keeping an eye on these key players can provide valuable insights for investors and industry experts alike. Watch this space for more updates and analysis on the latest developments.