Foxconn

"In 2020, Foxconn employed nearly [a cool million workers](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor346) globally. As iPhone production swung into full gear a decade ago in Shenzhen, workers might have seen someone zooming around the campus on a golf cart. That would be Terry Gou, founder of Foxconn (also known as Hon Hai Precision Industry). Gou might start the day by doing laps in the company pool and then drive [his own golf cart](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor347), specially equipped with a bicycle bell, around the facility until late at night to monitor production. He is legendary in his native Taiwan for his dedication to work. Gou aggressively courted American companies like Dell and Apple to win contracts for manufacturing their products, earning their trust by guarding technical secrets and making products on time, at high quality, in massive volume."

"In 2020, I could have picked up face masks that were branded Foxconn (the world’s largest electronics contract manufacturer), BYD (the world’s largest electric vehicle manufacturer), or JD.com (China’s second-largest e-commerce platform). Companies retooled some of their production lines to get into the masks and money business. Chinese conglomerates rarely hesitate to go after the core business lines of others. Huawei, for example, expanded from making telecommunications infrastructure equipment to tread on companies like Xiaomi, which makes smartphones. And both have now leapt into the automotive business. This sort of expansion is driven both by the fiercely competitive market environments and by government subsidies that make it easier for companies to try their hand at making new products."

"Gou set up the officially accredited Foxconn University on the Shenzhen campus, [offering twenty-five majors](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor348), most of which were engineering related. Gou surrounded himself with deputies who worked nearly as relentlessly as he did, driving Foxconn executives to the factories six days a week and then to study sessions on Sundays. In earlier years, they studied engineering principles. One former employee told me that in more recent years, political education has been more prominent, meaning that they have to study the words of China’s top leader. The curriculum transitioned from “Steve Jobs thought” when Shenzhen was freewheeling a decade ago to “Xi Jinping thought” in the more disciplined present."

"It’s easy to get lost in factory zones because so many of the buildings look the same. The iPhone turbocharged factory complexes to enormous scale: Foxconn’s manufacturing campus in the north of Shenzhen occupies five hundred acres. The site has factories, of course, and dormitories. It also has grocery stores, cafés, a fire brigade, a hospital, cinemas, swimming pools, and vendor-operated restaurants. The factory is the size of a city. The population peaks in early fall as production ramps up to meet demand for the Christmas season. Dormitories fill up then, with up to six men or women crammed into one room. Assembly lines operate for three eight-hour shifts a day; there is never a minute that factories aren’t producing iPhones. At the peak times, three hundred thousand people work at Foxconn’s Shenzhen campus, about as many as live in Pittsburgh or St. Louis. [A Chinese report from 2009](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor345) estimated that the campus each day consumed forty tons of rice, twenty tons of pork, ten tons of flour, and five hundred barrels of cooking oil."

"The next time Foxconn really demonstrated its ambition and capabilities was for a product Apple hadn’t even commissioned it to build. In the early summer of 2003, Terry Gou’s company invited a group of people from Apple Product Design and Operations to Longhua for some show-and-tell. Gary Hsieh, a general manager at Foxconn whom one industry colleague describes as “a completely rogue entrepreneur,” led the meeting. He unveiled a third-generation iPod—only, it wasn’t made by Apple. It was a replica, made in-house. The Apple people passed it among themselves, marveling at Foxconn’s ability to reverse-engineer the iconic music player. The replica had a different skin on the outside, but the same display, scroll wheel, and buttons. Even how it operated and played music was nearly identical to the real thing. “It was as if our own software-hardware team had built it,” says an Apple engineer who was there. The point Foxconn was making was simple: *If we can build a replica of this quality without your training our staff or sending the official specs, imagine what we could build as real partners.*"

"Apple took extraordinary control over its suppliers to ensure it was getting the appropriate prices. It demanded access to every detail about the supplier’s operating costs, from the wages of its workers and the cost of its dormitories to the bill of materials and expense of the machinery. In fact, Apple often had a better sense of the suppliers’ operational costs than the supplier itself. Because rather than have the supplier purchase the raw materials needed for whatever component it was manufacturing, Apple procured these components on their behalf—a power move that obfuscated from the supplier what the prices were. The tactic had emerged around 2010, when Foxconn was trying to earn extra money by purchasing components at one set of prices, then billing Apple a higher cost. Apple responded by “disintermediating” Foxconn. Another motivation was simply that, when annual iPhone shipments ran into the tens of millions per year, and then into the hundreds of millions, Apple realized it wasn’t good enough to assume its suppliers would secure enough raw materials—the only way to ensure this was to be involved in negotiations directly. The power this team wielded was enormous: up to 1,300 people all reporting to Tony Blevins."

"As multi-touch developed, Apple believed they could use the technology to create a tablet. Hundreds of prototypes were built, including some models with electronics assembled by a small team in Foxconn, but the result was a tablet-like device that was fat, ugly, and slow. Semiconductors just weren’t speedy enough to power the touchscreen interface of an eleven-inch screen. And because it took too much power, the battery was huge, so the device was huge. Meanwhile, the fear that the iPod business would be cannibalized by the phone giants continued to fuel anxiety and innovation. “It was an existential crisis,” a senior engineer says. “[We were saying], ‘You realize what’s gonna happen here is this business we built on iPods is going to go away. We *need* to build a phone.’ ”"

"Foxconn’s system could handle other tweaks to the configuration as well, such as different processor speeds and memory upgrades, so regardless of what the customer ordered, Foxconn could put it together without delay. The production lines Foxconn built were just for Apple, and around each assembly line, it formed a hub of sites to build everything else that was needed: the molding factory, plus production lines for the logic boards, keyboards, mice, and language kits. “The whole supply chain was built around the assembly line,” says an Apple employee who worked on setting it up. “Only when the order is triggered [would Foxconn] start to pull all the different components from the hub out and into the assembly line.” And once an iMac was assembled, it went immediately into Apple’s sales division. The system was designed so that Apple’s inventory was virtually zero—as soon as Foxconn delivered a finished iMac to Apple, it was placed en route to a customer. If there was no order, there was no inventory. Of course, Foxconn had to buy the necessary components in advance, but that was its problem, not Apple’s."

"For years, Cupertino had flown engineers into China by the planeload to oversee the ramping up of new products. Prior to Covid, Apple was booking “50 business class seats daily” from San Francisco to Shanghai, according to an accidental leak from United Airlines revealing Apple as its largest corporate customer. Suddenly that wasn’t possible. But every product Apple made had an in-region support team, and they were forced to step up their game. Apple’s partners, too—from Foxconn, Luxshare, and BYD to deeper layers in the supply chain—knew what they were doing. Apple had trained their engineers and, at times, orchestrated mini-crises to let the schedule slip and see how the suppliers would react. “I intentionally let one whole build just basically crater,” says a former engineering manager, describing an event before the pandemic. “It was an example for them to learn what it takes.” It was like the old parable about teaching a man to fish. “All of these suppliers, or a lot of them, have gotten to the point where they understand what it takes to develop an Apple product,” this person says. “And so when we stepped away, there’s a machine that’s already enabled, that knows what it takes to build a product.”"

"Indeed, China sports a level of technical sophistication that multiple experts struggle to even comprehend. The layperson often believes Foxconn could just open a factory in a different country; but the Foxconn hubs in China are surrounded by hundreds of sub-suppliers all ready to compete for the next major order. “For Apple to give that system up is tricky,” says Jay Goldberg, founder of D2D Advisory, a tech consultancy. If Foxconn, for example, needs to install sonic welders—a process to merge different metals or plastics with ultrasonic energy—it can call up any number of firms to run the line and hire the labor. “There’s all these subcontracted, specialty niche firms, and nowhere else does that exist,” Goldberg says. What China offers, in other words, is not simply labor, but an entire ecosystem of processes developed over more than two decades."

". But Gou grasped earlier than anyone that the value of working with Apple wasn’t the profits, it was the *learning.* Foxconn might not win much profit from Apple—it might even lose money at times—but the work itself, as well as the lessons Cupertino offered by having its engineers work side by side with locals in the factories, gave his team a deep education. Foxconn’s goal was to absorb these lessons and apply the skills to its other, more lucrative clients. “His people used to hate us, because they used to make no money out of us,” says an Apple operations executive."

"Unbidden, Foxconn had orchestrated its own job interview and demonstrated a willingness to start that day. Hsieh and Gou took the Apple visitors on a tour, showing them a facility with capacity to build an immense quantity of iPods. “Terry’s like, ‘All this is at your disposal. We have all these great engineers. We’ve got all this stuff for you, and we’re here to help,’ ” says a person present."

"The Foxconn officials proposed to help in the development of the next iPod. They offered to do schematic layouts of the factory and perform much of the grunt work, like creating detailed digital models of the needed parts in CAD, or computer-aided design. Because it had such confidence in Apple’s future, Foxconn said it would take on this work for pennies on the dollar. Tony Fadell credits Terry Gou with understanding the value of working with Apple better than anyone. “Terry was all about the relationship. He knew he needed to be with somebody whom he could grow with,” Fadell says. “He just knew that if he had a really good relationship with us, he would be able to grow with it and get the capital he needed to be able to build the infrastructure ahead of everyone. And the other thing is, we trained all his engineers.”"

"After another three months, the site had been transformed again. By then Foxconn had installed new machinery, hired tens of thousands of people, and had the production line up and running. The iPod Nano that Foxconn would begin building in the millions weighed just 1.5 ounces, about three-quarters less than the original. Jobs, wearing a black V-neck and a pair of dark blue jeans when he showed off the “impossibly small” device in September 2005, presented it by saying, “You ever wondered what this pocket is for?” A camera zoomed in on the small inner section of the pocket of his jeans as he pulled out the iPod Nano. “Well, now we know.”"

"Much later, when production was set up, two-thirds of the line was devoted to testing and validation—an unheard-of idea at the time, indicating just how seriously Apple was rethinking the rules of mass manufacturing. “Nobody would do that because of the cost,” one of the engineers says. They were adamant that the thirty millionth unit be identical to the first. A Nokia engineer working within Foxconn in the late 2000s confirms this, recalling that Nokia had one test station for its phones. When he got a chance to see the Apple area—which was making fewer phones than Nokia—he was stunned to see fifty test stations. “It was incredible micromanagement of the whole process,” he says."

"“Everyone could see Foxconn’s operational superiority,” says a PD engineer. Foxconn introduced an “all in one site” model for Apple projects, meaning FATP—final assembly, test, and pack out—would take place within a small area where it was also sourcing parts, making enclosures, and providing or facilitating services like stamping, molding, and forging. “Communication during development or when production issues arose was as easy as calling each other and meeting in five minutes in a meeting room to talk about issues, instead of summoning suppliers from a few hours away or another country,” says the PD engineer."

"“Terry has an intuition about how to get government incentives that is hard to rival,” says a former Foxconn executive. “Nobody in the West can ever understand how China [attracts] so many factories. It’s literally—you’re given land. They’ll build the infrastructure for you. If you expect the buildings, they’ll build them for you. They’ll help you with your interprovince migration. If there’s not enough labor in the zone they want you to go on, they’ll get you the people and they’ll bear that cost.” This person adds: “The caveat is: you better deliver on your export commitments.”"

"Thanks to this alliance of private and state interests, Foxconn didn’t just command low-cost labor, but also cutting-edge equipment. One Apple executive recalls, in 1999, being stunned by the dichotomy between the world-class machines in the Foxconn factory and the “shithole” conditions around them. “Terry’s office was, like, a trailer, with a plastic table-desk,” this person says. A photographer who visited a decade later described it as an “old, single-story, metal-roofed building that more resembles a landscape maintenance shed than a typical executive suite.”"

"Foxconn began offering final assembly on the cheap for the same reason Costco sells hot dogs: It gets people in the door. Foxconn then upended the world of tooling by giving it away for free. That is, Gou would offer to pay the up-front costs of establishing the custom molds, dies, fixtures, and other equipment necessary to start building a product at scale. “That can be half a million or a million dollars,” says a former Apple engineer. “And that was absorbed by the manufacturer—by Foxconn. So Apple just paid for the production parts.” Then Foxconn would work to integrate all procurement, manufacturing, and logistics into a one-stop shop. It made its money back the same way a mobile carrier might—giving customers a free phone but earning fees in a two-year contract."

"The second thing LG didn’t know is that a little-known Taiwanese company called Hon Hai Precision was already reverse-engineering LG’s capabilities in building a CRT and was being “brought up” by Apple as a secondary supplier to build the iMac in China. The founder of Hon Hai had heard of LG’s twin fiascoes in Wales and Mexico and called up Apple with a simple message: “I can fix this.” That phone call would have enormous consequences and reverberate for decades, turning Hon Hai Precision into one of the world’s largest companies by revenue and a household name the world over. Most people would know it by its trade name: Foxconn."

"The tin roof of Terry Gou’s cramped and cluttered, cement-floored office served a subtle purpose. Foxconn, a Taiwanese contract manufacturer taking advantage of cheap labor on the Chinese mainland, was all about the client. The shabby quarters at Gou’s office indicated that Gou’s clients were getting the best deal. Every dollar he earned was going to the production line, not to marble floors in the reception area."

"The Apple-Foxconn relationship goes back to at least the early 1990s, but in a limited way. Foxconn had been championed by H. L. Cheung, a Singaporean Apple executive from 1981 to 1997, who would later join Foxconn. But Terry Gou’s company was mostly just a supplier of affordable components, like those connecting printed circuit boards to the housing. Apple engineers from the mid-1990s remember it as “the connector company.” But Foxconn quickly expanded its skill set, and approaching the year 2000, it was demonstrating its prowess as a jack-of-all-trades with a model different from the other Taiwanese companies expanding to the mainland."

"Yet it’s worth highlighting how recently Foxconn developed this reputation. In 1999, it was a company with $1.8 billion of revenue, far smaller than Solectron, SCI, or Flextronics, its US rivals. By 2010, Foxconn revenues were $98 billion, more than those of its five biggest competitors combined. And Foxconn’s extraordinary growth in those eleven years is the consequence of one client more than any other: Apple."

"So Apple did something totally novel. It purchased hundreds of millions of dollars of machinery, placed it in the factories of its supply partners, and “tagged” it for Apple use only. “They were doing more capital equipment buying than anybody I could see in the world, and yet they were not owning it themselves—they were putting it in other people’s plants,” O’Marah says. From when the iPod launched in 2001 to when the iPhone went on sale in 2007, the “machinery” that Apple owns—equipment used in supplier operations—quadrupled from $245 million to $1.1 billion. Such capital expenditures stunned O’Marah, yet in the next five years that number would soar to $16 billion. The investments allowed its suppliers to operate at a level they’d otherwise be incapable of. And it gave Apple considerable advantages. Not only did Apple disallow the supplier from using the equipment on rival products, but at any point Apple could drive a truck to the vendor and reclaim the machinery. If Apple wanted to reduce orders at one supplier and favor its rival, “Apple would have the machines shipped to another factory—no question, no discussion,” says a manufacturing design engineer. In fact, around 2011 when Foxconn was attempting to exert leverage based on its dominant role assembling iPhones, Apple engineers showed up at a Foxconn assembly line and began unmounting expensive machinery from the floor, in broad daylight, before transferring it over to Pegatron. It wasn’t necessary to shift a large percentage of orders to the Foxconn rival—just making the point was enough to instill order."

"As the PC revolution took off in the early 1980s, Gou got in on the ground floor and created a name for himself making reliable sockets and connectors—small components that facilitate communication between different parts of a computer. The *conn* in Foxconn—Hon Hai’s international name—refers to connectors. “Fox” is just an animal he likes."

"In 1999, Foxconn was already building the enclosure for the G4 desktop and supplying components for other Apple computers. Miller recalls Foxconn “just crushing it” in terms of production, cost, and speed, a combination nobody could really compete with. “It was mind-blowing how much manufacturing and tooling capability they had,” he says. “Terry Gou invested a lot of money, setting that place up to be fast and cheap.”"

"The company once again established its hub model for iMac production, bearing the up-front costs. “Apple didn’t own any of the inventory parts that were there. Everything was borne by Foxconn,” says a Czech-based Apple worker. “Apple had zero capital expense or investment.” More than 300 people were hired to run multiple assembly lines, and Foxconn established a giant molding site for the plastic enclosures. Apple teams from Singapore were sent in to train the workers and ensure quality. Apparently smitten with the country, Terry Gou purchased a twelve-bedroom castle near the Czech factory in 2002, for a reported $30 million, and began spending his summers there. The fabulously rich CEO no longer had to worry about tin roofs."

"An Apple engineer recalls telling Foxconn: “If you guys want this business, you have to earn the business. You need to do all the same hard work that LG did to ensure that the tools meet the part quality, interchangeability, and everything, such that the final cosmetic fit and finish is consistent across each and every product, no matter how you mix them or where you ship them across the world.” It was a giant effort."

"The site had previously been run by a state-owned company called Tesla, whose specialty was radar systems and whose biggest client had been the government of Iran. The site had an eerie feel to it, like it had been hit by a neutron bomb. Forklifts stood motionless on the floor and cups of tea, their contents long gone cold, had been left on the tables. In May 2000, Foxconn was able to buy the plant for just 102 million CSK (€2.9 million), a fire-sale price because it was bringing in jobs. Foxconn also won from the government a ten-year tax holiday."

"At one point, according to an ex-worker named Andrea, workers making Apple products didn’t receive an annual bonus as they were promised, so they threatened a “strike emergency” just before the ramp-up ahead of Christmas. “Afraid,” the Foxconn managers deposited the bonuses within a week. The incident triggered an audit by Apple, which interviewed workers about their experience. Apple, Andrea said, advocated for better conditions, but “instead Foxconn closed the division within half a year and 330 people were dismissed.” Around the same time, in August 2009, Foxconn shut its Fullerton site, too."

"“We wanted to machine aluminum,” says Tony Fadell. “High polish, very accurate, detailed metals—and that’s where Foxconn came in. Foxconn supplied all the metals for the Apple products, and Foxconn got tons and tons of money [from Apple] to go get all the equipment [needed] to make these high precision metals.” Jony was enamored with the stainless steel back of the original iPod. Earlier reviewers of the device critiqued the choice of material because of the way fingerprints marred the chrome look. But this wasn’t some oversight. It forced the user to polish the unit, and for Ive that created an unconscious, nurturing connection."

"Rubinstein was floored by Terry Gou’s ability to turn vision into reality at inexplicable speed. In America, he says now, nine months wouldn’t be enough time for a greenfield site to have attained the permits to start building. “These aren’t necessarily bad things, by the way,” he says. “It’s just not the way it is. And so we’re not competitive.” From a distance it appeared that Foxconn could go from zero products to 100,000 *per day* with ease. Other Chinese groups could best Foxconn in quality or match them in time to market—the period between taking a design and building the first batch. But nobody could match Foxconn in time to volume—how long it took to build a product in great quantities."

"The success of the iPod Mini all but assured Foxconn was getting the contract for the next iteration: the iPod Nano. But when Terry Gou invited Jon Rubinstein to Shenzhen to discuss the project, Apple’s hardware chief nearly had a panic attack. “Terry points to an empty lot. And he goes, ‘Here’s your factory.’ ” Rubinstein looked into the distance, his bewilderment turning to anxiety. “I’m terrified,” he recounts. “It’s a typical Chinese field filled with garbage. I’m panicking. And he says, ‘Don’t worry, I got you covered.’ ”"

"The yacht invite paid off. Hills chose Foxconn as the manufacturing partner for its nascent and still precarious phone project. Foxconn signed a vague Request for Proposal that told them virtually nothing about the gadget, but it called for Hills to develop a preproduction site within Foxconn, a sort of archetypal line that Foxconn would then duplicate every inch of to scale production."

"Cook, risk-averse by temperament, wasn’t so sure. But prior to the meeting, Gou had already met with Apple engineers in China, who were feeding him details and forecasts that were more optimistic than the views in Cupertino. So Gou made a handshake deal on the spot. He offered to personally facilitate the necessary actions to establish mass production, in exchange for taking all the orders when—he believed—they inevitably emerged. “Foxconn is going to underwrite the investment,” he told Cook. “I’ll build two campuses with Chinese government partners, along with the provincial and central government. And when your volume is there, I’m going to build the products for you.”"

"Terry Gou’s bet exemplified his tenacity, ambition, and daring disposition. What made him such a good competitor was his ability to predict his clients’ needs before his clients did. By the time Apple realized it needed to double production of some hit product, Foxconn would’ve already increased capacity by expanding its factory and moving the precision machinery into place. But more than that, the bet demonstrated Gou’s political savvy. When the global financial crisis hit, big investors and entrepreneurs based in Taiwan and Hong Kong retreated from China, a natural response, as demand for goods from North America and Europe sputtered. Gou, by contrast, was willing to invest, and he did so in ways that aligned his political interests with Beijing’s."

"By the end of 2010, the number of attempted suicides rose to eighteen. Foxconn became a household name for all the wrong reasons, and Apple was accused of “iSlavery.” Whatever his other skills, Terry Gou didn’t exactly come out of this crisis looking like a media-savvy CEO. He installed nets all around the factories, to prevent workers from jumping to their deaths, and compelled workers to sign a pledge not to commit suicide. Describing his hopes for the new factories in Zhengzhou and Chengdu, Gou said that workers living inland and closer to their families would feel less anxiety. “There will be hospitals, there will be other facilities, there will be sources of entertainment,” Gou said in September 2010. “And if people still decide to kill themselves, then no one can blame me.”"

"The Sanlitun store employees were selling Apple products with the same conveyor-belt logic, efficiency, and monotony of their comrades 1,300 miles south in Shenzhen, who’d assembled and packaged the same units just days earlier at Foxconn. Demand was so great that Apple closed the Genius Bar just to make room for cash registers, and at peak hours there were thirty registers running at once, each processing a transaction every two minutes. “Nobody had seen that kind of volume in retail before,” says another Apple executive. “It just happened. There were massive growing pains.”"

"Hard-liners in Beijing had viewed Apple as an exploitative power because through their conventional lens, it looked that way. Samsung had several dozen formal partnerships in the country; Apple had none. Samsung had its own manufacturing plants; Apple had none. But Guthrie’s argument turned this logic on its head. He emphasized that Apple was embedding its top engineers into more than 1,600 factories, making a few dozen partnerships look paltry. The difference was that the likes of Intel and Samsung were trumpeting their joint ventures and investments in the country, while Apple was silent. Worse, Apple was allowing Foxconn to take credit for all manner of investments that ultimately traced back to iPhone and iPad demand."

"Besides Luxshare, the other three major indigenous contract manufactures making Apple products are BYD Electronic, a major supplier of hardware enclosures and assembler of iPads; Goertek, a maker of AirPods and AirPods Pro; and Wingtech, which manufacturers Mac Mini desktops and MacBooks. These groups collectively reported $6 billion of total revenue in 2015; by 2020 their revenues had quadrupled to $25 billion, and in 2025 their sales are expected to exceed $52 billion. Apple has been instrumental to their success, shifting orders from Taiwanese leaders Foxconn, Wistron, Pegatron, and Quanta. As David Collins, an Asia-based manufacturing consultant, said of the Red Supply Chain in late 2020: “Foxconn’s share price is down roughly 50% from two years ago. They see blood in the water.”"

"Wang (pronounced “Wong”) had two major audiences in mind. One was the capital markets. Wang and her older brother founded the company in 2004 and hold at least 39 percent of its shares. Over the prior ten years, Luxshare had earned $782 million of net profit. Its owners stood to make far more in the stock market than from low margins on final assembly. By turning Cook’s visit into a media event, Wang delivered a message to investors: Luxshare was on the up-and-up, and its rise would come at the expense of Foxconn. On the day Cook visited, Luxshare was worth $12 billion—validating how successful it had become from supplying components to Apple for nearly a decade. Still, that was only one-fifth of Foxconn’s $57 billion valuation. Within two and a half years, Luxshare’s market value would soar to $38 billion, overtaking Foxconn’s own dented market value at a time when the Taiwanese group was bringing in thirteen times more revenue. Any financial analysis would struggle to reconcile how that could be. The two companies were in the same low-margin business, using the same techniques, and servicing similar clients. But Chinese investors know their own country’s politics well, and they saw the writing on the wall. Foxconn, too, understood the challenge, and in 2019 it set up a task force to study its Chinese rival to understand its technology, expansion plans, hiring strategy, and whether the company was supported by any Chinese government entity."

"But the “strictly business” narrative fails to grasp the nexus between supply chains and local politics. As Taiwanese scholar Wu Jieh-min argues, the role of the Chinese state “is exceedingly understated” in most research. The “underpoliticized” narrative, he writes, overlooks how “the Chinese government invested capital and selectively nurtured” certain industries, including telecommunications and cellphones. Such help allowed local suppliers to purchase their way into Apple’s supply chain. Luxshare, for instance, got into iPhone assembly after buying two China-based subsidiaries of Wistron, a Taiwanese rival, for $472 million, in July 2020. The following year, BYD Electronic spent $2.2 billion to purchase the Chengdu- and Wuxi-based electronics manufacturing facilities of Jabil, a US contract manufacturer that had been supplying Apple for fifteen years. And with cheap access to capital, they could acquire workers from Foxconn and other suppliers who already had Apple experience. These tactics have been so successful that they’ve helped to drive a shift of geopolitical proportions. According to Apple insiders, 100 percent of final assembly, test, and pack out of Apple hardware was performed by Taiwanese companies in 2012; in the years since, that percentage has fallen below 50 percent—reflecting a staggering shift toward Chinese suppliers that has made Apple hugely popular in government circles."

"In the end, Mac Pros were indeed shipped from Texas, and Apple made a snazzy video demonstrating the processes—scoring whatever political points it could. But the project made it only because Apple leveraged relationships with suppliers in the one country where it knew the talent existed. “We flew people from China to get it fixed,” one of the engineers says. “People working for Foxconn.” The irony is hard to overstate. After more than a decade of sending its top engineers to China, to train staff on how to build things at Apple quality, Cupertino needed to fly Chinese engineers into America’s heartland to complete the project. Apple had closed its American factories only a decade earlier, but as one of the engineers put it, “It was a very formative decade.”"

"Such tactics accelerated after 2017 but had been going on for years. One former Apple executive recalls, around 2012, being with one of Terry Gou’s top executives when they saw indigenous Chinese companies holding signs outside the Foxconn factory, recruiting talent. “Holy shit, I’m gonna lose my best guys here!’ ” the Foxconn executive exclaimed. Recognizing the two, a top engineer walked over and offered his hand: “It was a pleasure working with you. I’m working for Huawei now.” As the engineer walked away, the two executives were silent for a few seconds. Then the Apple executive turned and said, “Who the fuck is Huawei?”"