Masked workers at an assembly line of iPhones at Foxconn’s sprawling plant in Zhengzhou. Foxconn is one of China’s largest foreign-invested companies and exporters. Photo: Xinhua

Chinese media recently called on local manufacturers to diversify from doing orders for Apple and to upgrade their technologies to increase their bargaining power in the global supply chain. However, there was another reason behind the state media call last month.

Local media said Beijing urged local manufacturers to reduce their reliance on orders from Apple as soon as possible. The call came after “34 Chinese suppliers were removed from Apple’s supplier list.”

In the past few days, some Taiwanese media reported the “news” about the removal of Chinese suppliers from Apple’s supplier list and linked it to the power shortage in mainland China. However, they failed to verify that the so-called “removal” was old news from May and was used as an intro by the state-run CCTV as propaganda on September 18.

The story started when the global launch of the iPhone 13 was done on September 17. Despite the ongoing trade and technology wars between the US and China, many mainlanders rushed to pre-order the latest version of Apple smartphones on the internet. Sales of the iPhone 13 started in mainland China on September 24.

On September 18, CCTV ran a three-minute video report, saying that several Chinese manufacturers had successfully diversified their businesses away from Apple and had eased their “Apple dependency disease.”

“In May this year, Apple released its supplier list, in which 34 Chinese firms were removed. For a very long time, Apple’s suppliers did not have any bargaining power as they were constrained by the risk that they could be removed from Apple’s supplier list,” a male anchor said in the intro to the CCTV report.

The report said Lens Technology, a Hunan-based lens product maker, had made a fortune by supplying touch panel cover glass to Apple since 2015. After diversifying its customer base, Huawei Technologies then become its biggest customer.

Liu Xingliang, an expert and a panel member at the Ministry of Industry and Information Technology, was quoted in the report as saying that manufacturers could reduce their reliance on Apple’s orders by “putting their eggs in different baskets.”

Pedestrians walk past an advertisement for iPhone at a metro station in Shanghai. Photo: AFP / Xu Hede / Imaginechina

It is normal for state media to run success stories about Chinese companies, especially after the iPhone 13, a US high-end consumer product, received strong market demand. But since early October, the CCTV report has been widely described by Chinese media as Beijing’s call for local manufacturers to reduce their reliance on Apple’s orders.

On October 2 and 4, two commentaries were published on Sohu.com and NetEase’s 163.com, respectively. They said 110 of the 200 suppliers of Apple’s iPhone 13 were located in mainland China, but none of the Chinese suppliers were supplying core parts of the smartphone.

They said Apple had already kicked out 34 Chinese suppliers and could replace more at any time. It said the Ofilm Group, a Chinese camera module supplier, had lost orders from Apple in March this year and suffered a 90% year-on-year decline in its first-half net profit.

In March, Ofilm notified its investors that it lost a “particular overseas client.” Media reports said it referred to Apple. In July 2020, Ofilm was put on an entity list of 11 companies and barred from purchasing US products and services as it was accused of violating human rights in Xinjiang province by the Trump administration.

More articles and video reports were published after the Sohu commentary. Another article titled “Tim Cook is reckless, 34 Chinese suppliers removed, get rid of ‘Apple dependency disease’!” was published by 163.com on October 9.

Apple CEO Tim Cook. Photo: Reuters

It said Cook had tried to reduce Apple’s reliance on China’s supply chain, but most Chinese manufacturers had not diversified from Apple’s orders. It also blamed Chinese customers for buying the 4G iPhone 11, but not the 5G Huawei smartphones.

In late May, Apply released its supplier list in a low profile manner. It removed 34 Chinese suppliers, but at the same time added 36 new ones, including 12 from mainland China, six from Taiwan, four from Hong Kong and 14 from other places.

Mainland China, including Hong Kong, has remained the No 1 supplier nation to Apple with 51 suppliers, compared with 48 in Taiwan and 34 in Japan.

The eye-catching headline of the “34 Chinese suppliers removed” was then used in a report published by Taiwan’s Radio Free Asia (RFA) office on October 7. But the report did not verify that Apple’s supplier list had been released in May.

Citing Taiwanese and mainland academics, the report said mainland China might take several decades to make breakthroughs in its semiconductor industry, and it was still struggling with a nationwide power crunch.

Starting from last Saturday, the RTA report was widely reprinted by Taiwanese newspapers. It was also circulated by many overseas Chinese YouTubers.

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