I think you have already heard about the situation that happened in the Suez Canal last week. The container ship Ever Given, owned by Evergreen’s shipping company, sat on the chalk while passing through this very canal, which is one of the most important trade arteries in the world. Thus, hundreds of ships were stuck on the way from Asia to Europe, thereby stopping the supply of many goods. It was rumoured that if Ever Given was not taken off the ground in the coming days, and it could provoke a shortage of various products and stop producing many electronics, including Apple. But is it really so?
Ever Given blocked the Suez Canal for a week. It has already been taken off the ground, but could it – at least in theory – damage Apple’s supply?
At the time of the release of the material, Ever Given had already been successfully refloated and returned to the fairway by 20%. Therefore, the following conclusions are only hypothetical. Another thing is that the facts that we operate on are directly related to the current situation and directly affect Apple’s ability to accept components from its suppliers and use them in production. Let’s figure it out in more detail.
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In which countries does Apple have partners?
Apple manufactures the iPhone (and the rest of its devices, too) from components supplied by partners worldwide. However, oddly enough, it is the Asian manufacturers that are predominant. The paint is sent to it by the Japanese Seiko Advance, batteries and displays – Korean Samsung, processors – Taiwanese TSMC, cameras – Korean LG and Taiwanese Largan Precision. Their Asian origin is of great importance because most do not have to transport anything through the Suez.
However, there are key suppliers from Apple and manufacturers from other countries and even continents. For example, Qualcomm, the main supplier of modems for the iPhone, Corning, a tamper-evident glass manufacturer with all manufacturing facilities in the US, and, say, Cirrus Logic, a company that makes sound chips for Apple. In fact, they (and not only them but Apple also has quite a few suppliers from the USA) are located at a very significant distance from China, where Foxconn and Pegatron’s assembly shops are located.
Where Apple buys iPhone parts?
But Apple rarely ships the required parts by sea. In order not to be dependent on all sorts of incidents that may occur on the water, the company prefers to use aviation. In any case, this applies to vital components, which cannot be dispensed with in any way. Most likely, these include modems, glasses and several other components like Broadcom controllers. They are something Apple sends by air. Yes, this leads to an increase in the cost of components and, as a result, the cost of equipment, but this way, the company protects itself from delays in deliveries.
Of course, Apple’s list of suppliers includes those based in the United States and, say, Austria, Belgium, the United Kingdom, and many other places. However, if you look at their list – this is not some secret, but quite public information – you will see that many manufacturers that Apple works with have backups closer to Asia. Take 3M, CCL Design, or Cypress Semiconductor Corporation. These are either their own subsidiaries of these companies or alternative suppliers, which Apple keeps in reserve. Accordingly, it makes no sense for her to drive ships through Suez either.
Why Apple only flies iPhones?
As for the logistics of finished products, there is absolutely no place for sea routes. Wherever Apple ships its electronics, Boeing 777 freighters are almost always used for this purpose; because of Boeing’s capacity, Cupertino decided to change all new iPhones’ configuration, removing the charging block from them. After all, if before each 777th contained 450 thousand smartphones, now this figure has doubled, to 900 thousand. As a result, Apple has cut logistics costs, saving it tens of millions of dollars globally.
Obviously, Apple is not very dependent on shipping arteries. At least directly. But indirectly, blocking the Suez Canal could well spoil the company’s fees, because in this case, many enterprises would begin to turn to aviation. This is the most logical way to deliver goods in the absence of sea communication. No, someone would certainly have gone around Africa, but surely there would have been those who would have chosen Apple’s path, thereby provoking a shortage of available aircraft. As a result, we could really feel the Suez Canal blockade, which would be expressed in an increase in almost all Apple equipment’s delivery time.