The restructuring of global supply chains away from China is continuing. Apple has just announced that it is shifting some of its component sourcing to the US, stating on Tuesday (23/5), that it had agreed a “new multiyear, multibillion-dollar agreement with Broadcom…through this collaboration, Broadcom will develop 5G radio frequency components — including FBAR filters — and cutting-edge wireless connectivity components. 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.”
Broadcom is a leading supplier of components including semiconductors. Although it is today based in the US and has production facilities there, it also has a strong presence in South East Asia, having once been headquartered in Singapore.
For Apple to move its component sourcing away from China is significant. Although Apple has already expanded its assembly operations in South East Asia and India, its component supply chain became more dependent on China over the past decade, as Chinese electronics manufacturers began producing more complex products. For Apple to move such sourcing to products made in the US, is a fundamental change of its supply chain policy.
It comes as more of the electronics sector moves away from China. For example, Japan has placed a ban on production equipment being exported to China. Japanese companies such as Nikon are key providers of the capital equipment used in the sector. This is driving Chinese semiconductor producers to modify their sourcing strategies, with Singapore seeing a boom in demand for semi-conductor related capital equipment from Chinese manufacturers.
It very much appears that the electronics sector is moving towards a very different type of supply chain architecture. The political pressure on the sectors seems to be resulting in more sourcing in economies such as the US, but other, less obvious locations such as Japan, may also be big winners from this. Logistics provision will have to follow.
Source: Ti Insights
Author: Thomas Cullen
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