Advance And Retreat Of Chinese Suppliers In Apple Industry Chain

Recently, Apple announced the latest list of 200 suppliers, and the change of Chinese suppliers has aroused widespread concern in the market.

Although OPEC's removal of the fruit chain has raised concerns about the stability of the fruit chain target, the list shows that Chinese mainland (including Hong Kong) enterprises accounted for 53 of Apple's top 200 suppliers, ranking first for the first time.

This is an intriguing signal. This means that Apple depends not only on the Chinese market, but also on made in China.

So, in this situation, does the market worry about the fruit chain mark dissipate? Judging from the performance of the secondary market, it seems that it is not so simple.

"Advance and retreat" of Chinese suppliers

According to the statistics of 21st Century Capital Research Institute, there are 101 Chinese companies in the latest list of Apple suppliers in 2020, including 53 in mainland China (including 10 suppliers in Hong Kong) and 48 in Taiwan; There are 32 American companies, 34 Japanese companies and 13 Korean companies from other major countries.

From the perspective of regional division, compared with the list in 2019, 11 new manufacturers are newly included in mainland China, which is the region with the largest number of new enterprises, including Nanping aluminum, Fuchi high tech, Jingyan technology, Xinlun technology, Changying precision, Derun electronics, Shengli precision, Suzhou xinjieshun hardware and electrical Co., Ltd., Shenzhen Tianma Microelectronics Co., Ltd., Guangzhou Zhongshan Metal Technology Co., Ltd Zhaoyi innovates.

Among them, Jingyan Technology (300709. SZ), Changying precision (300115. SZ), Xinlun Technology (002341. SZ), Derun Electronics (002055. SZ), Shengli precision (002426. SZ), shentianma a (000050. SZ), Zhaoyi innovation (603986. SH) are all A-share listed companies.

Specifically, Jingyan technology is a metal powder injection molding (MIM) product manufacturer and solution provider, providing customized MIM core parts products in large quantities for the consumer electronics and automotive fields; Changying precision to precision mold as the main business, products include mobile phone structure matching kit, LED precision bracket; Xinlun technology is a new material manufacturer, mainly supplying soft package aluminum plastic film, functional tape and clean products; Shengli precision is mainly engaged in flat panel TV structure module; Derun electronics is mainly engaged in consumer electronics, related electronic connectors and precision components and related technologies; Zhaoyi innovation is committed to the design and development of all kinds of memory, controller and peripheral products. Its main products are nor flash, NAND flash and MCU; Tianma microelectronics mainly produces LCD.

In terms of business scope, the new Apple suppliers are mainly materials, including panel and chip industries.

Among them, a few continental suppliers that were not known to the public before entered Apple's supply chain system.

For example, Shanghai Fuchi High Tech Co., Ltd., a professional manufacturer of metal powder injection molding (MIM) products, is committed to using MIM technology to produce small, three-dimensional shape complex high-performance structural parts. The company is actually a subsidiary of Dongmu Co., Ltd. (600114. SH).

It is worth noting that the business scope of Fuchi high tech is similar to that of Jingyan technology, both of which are in the leading position in the industry. According to the 21st Century Capital Research Institute, MIM technology is used for the hinge of folding screen mobile phones, and both companies have entered Apple's top 200 suppliers, which shows that Apple has paid more attention to MIM industry.

The main products of Nanping aluminum industry are aluminum profile, aluminum processing and deep processing. It should be pointed out that Liyuan refining, which is mainly engaged in industrial aluminum profiles, was removed from the list of top 200 suppliers by apple. The company was suspected of financial fraud and was investigated. From the business point of view, Nanping aluminum may choose to replace Liyuan refining.

In addition, Zhongshan metal technology is a research and development and production of high-precision metal profiles, shaped bar enterprises, relying on the development experience and production technology in mobile phone structural parts, the profile is applied to television and electronic products. Xinjieshun is a precision hardware parts manufacturing enterprise integrating computer, mobile phone peripheral and all kinds of screws, nuts, rivets, rivets, plastic embedded copper nails, all kinds of shaft sleeves and non-standard parts.

Further concentration of mainland suppliers

Before that, the news that ofI light was removed from the fruit chain made the market worry about the stability of the fruit chain in mainland China. However, judging from the latest situation, mainland suppliers are still important partners of apple.

Eric Tseng, chief analyst at Isaiah research, a Taiwan based research firm, said there was no clear sign that Apple was reducing its purchases and cooperation from mainland suppliers due to geopolitical tensions and factors. Apple basically selects suppliers based on cost and technology considerations, it said.

Compared with Taiwan, in the past 10 years, Taiwan suppliers in China have always been the first in Apple's supply chain, with 48 suppliers in 2020. Hon Hai Precision Industry and Heshuo united technology are still important suppliers. However, in recent years, Taiwan is increasingly facing competition from mainland Chinese enterprises. The number of suppliers in mainland China has increased to 43, which can be said to be a catch-up.

From the changes of Apple supplier distribution in recent years, it is not difficult to see the rise of China's market position.

In an interview, Jiang Jingjing, research director of Zhongcheng think tank, said, "Apple's supplier layout changes follow certain rules. In recent years, the number of Chinese manufacturers among apple suppliers has increased year by year, so it is expected that new suppliers from mainland China will be added; Secondly, suppliers in mainland China have always paid attention to the guarantee of technology and output; Thirdly, although it has a competitive relationship with Huawei, for its suppliers, it is conducive to the formation of industrial clusters and ultimately the formation of cost advantages; Finally, raw materials and production have a convergence effect. "

In addition, Jiang Jingjing said that during the special period of the epidemic, apple added Chinese manufacturers as its suppliers, which showed that Apple was able to take effective measures in the face of emergencies such as the epidemic, which was extremely resilient and agile, and had stable supply capacity.

In addition to the special impact of the epidemic and cost considerations, Lin Zhi, chief analyst of witdisplay, believes that it is a major trend for apple to increase the supply chain system in mainland China“ China is Apple's second largest market, which is important to Apple's overall revenue and profits. In order to stabilize Apple's market position and prevent millet and ov from seizing the market, this is an important consideration for apple to increase its local supply. "

Although the importance of suppliers in mainland China is constantly emerging, the phenomenon of apple supply chain transferring to Southeast Asia and South Asia cannot be ignored.

In a previous report, the 21st Century Capital Institute pointed out that there are objective reasons for the transfer of Apple's production capacity. On the one hand, China's labor cost is rising rapidly, while India still has a large number of cheap labor. On the other hand, the Indian market is an emerging market with huge potential, and local manufacturing can reduce the price of iPhones there. In addition to these market factors, from the perspective of supply chain diversification, Apple may also want to get rid of its dependence on China's manufacturing industry and reduce the impact of the international situation on production.

According to Nyingchi's analysis, from the perspective of Apple's supply chain layout strategy, Apple has been following the two systems of mainland China supply chain and non mainland China supply chain operating independently to achieve complete mutual substitution, but this goal has not been achieved.

The 21st Century Capital Institute believes that the current epidemic situation in India makes it more difficult for apple to copy the Chinese model in India. In the long run, it may not be good for China's supply chain.

Stagnant water in secondary market

In the secondary market, every move about Apple in the past can cause capital changes. However, although the adjustment of the list of Apple suppliers has sent a clear signal to the suppliers in mainland China, it has not caused a big market turbulence in the apple sector.

Lin Zhi believes that "the secondary market is hyped and expected. Apple's current products are mainly based on the original improvements and upgrades. None of them can make investors have a concept beyond expectations. Therefore, in the eyes of investors, the rate of return is not as high as expected. In addition, we have to face the uncertainty of trade frictions. Instead of putting money in venture enterprises, we should put money in sound assets such as liquor

Jiang Jingjing also believes that, for a long time, the concept of fruit chain is the fund's heavy position stock, but with the penetration rate of Apple products difficult to break through, the fruit chain is also difficult to achieve performance beyond market expectations. Of course, the instability of raw material prices and exchange rate itself also affected the performance, and ofiguang withdrew from the fruit chain The entry of inefficient suppliers has also received the reflection of falling prices from the secondary market.

"According to the efficient market hypothesis, the secondary market price of the fruit chain has already reflected its expected performance. At the same time, because the supply-demand relationship in the secondary market is the direct determinant of its price, the lack of unexpected surprise performance naturally reduces the demand of the secondary market, and the price goes down accordingly." Jiang Jingjing said.

So, from the perspective of employment performance expectation, can the arrival of 5g switching wave activate Apple mobile phone boom?

The answer to this question varies from person to person.

According to CSCI, the share of iPhones will further increase in 2021, with annual shipments expected to reach 220-230 million, up about 15% year-on-year. Due to the low base in the first half of 2020, Apple will still usher in a better growth trend in the next quarter.

However, Nyingchi believes that the 5g replacement boom is not really coming, "the core application has driven the previous replacement stage, but now 5g has no core application to drive industrial upgrading, which is still in the concept stage."

Overall, the 21st Century Capital Research Institute believes that in order to boost the fruit chain plate in the future, Apple will develop amazing products; Or fruit chain target occupies the core technology and plays an important role in the supply chain.

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