Since announcing it would not meet its own sales estimates on February 17, Apple, the largest company in the United States with a market value of nearly $1.3 trillion, shares fell nearly 20% from top to bottom.
Apple’s well known, but less understood ‘supply chain disruption’ has not only put sales at risk, but also exposed a vulnerability that will be difficult for the Apple to solve.
Directly or indirectly, Apple relies on about 3 million people in China for its operations there according to a recent Wall Street Journal report. This includes everything from the people who set tiny screws or thin printed circuit boards in the iPhone assembly process, to their supervisors along with engineering, tech, administrative and other personnel of almost every stripe. As the country shuts down, so does this workforce.
Yet finding a similar pool of skilled and unskilled workers in any other country, with the attendant multi-year training and developing the needed component suppliers, strikes some industry observers as impossible. And all this comes at a time when Apple is facing stiff competition in the Chinese market, notably from Huawei Technologies, that have reduced its overall market share.
As far back as 2015 some Apple employees were chafing at reliance on China, but the company stayed the course which, with the benefit of hindsight, presented risks that were too high. But with $206 billion of cash on hand, Apple has the kind of resources it will take to address its chinks in its supply chain strategy.
Apple supply chain
Apple cash position