As Apple reassesses China supply chain risks, suppliers also assess if it is a blessing or curse to be too reliant on US tech giant

As Apple reassesses supply chain risks in China and diversifies more production to countries such as India and Vietnam, so too are Chinese firms and investors rethinking the cost-benefit analysis of being overly reliant on the US tech giant for business, according to corporate filings and analysts.

A case in point was news this month that Goertek, an AirPods maker based in northeastern Shandong province, had lost orders from “a major overseas client”. Investors knew that could only be one firm and promptly dumped the stock, instantly wiping out billions of dollars in market value.

In 2021, Oflim - once one of the largest suppliers of camera modules for Apple - saw its revenue dive 53 per cent year-on-year in 2021 and another 37 per cent in the first three quarters of this year, after it was kicked off Apple’s supplier list.

But despite these concentration risks, Steve Peters, a Hong Kong-based management consultant at EmperorFBA.com, said China contractors often have little choice but to jostle for business from the maker of iconic iPhones and iPads.

“There are only so many big players in the electronics space. It’s really an inner circle and everyone is jockeying for position [with Apple],” said Peters.

While mainland China remains Apple’s primary production base, with about half of its top 190 disclosed suppliers based in the country as of September 2021, the risks for contractors overly-reliant on Apple are stark and China’s stock exchanges are taking note.