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A maker of turbine blades used in wind farms plans to restart production at a plant it closed less than a year ago.

Arizona-based TPI Composites announced plans to close its Newton, Iowa, plant in October 2021, citing rising material costs and a murky business outlook. The company continues to struggle in a troubling wind climate. Specifically, it reported a loss of $1.5 billion in its latest quarter and plans to implement further layoffs, but officials also said they were optimistic about TPI’s long-term prospects. while the United States and Europe are increasingly promoting renewable energy.

In the United States, in particular, legislation passed earlier this year will provide incentives for companies that use electricity from renewable sources. TPI recently entered into a new agreement to supply turbine blades to GE Renewable Energy and signed a new 10-year lease on the Newton plant to manufacture them in Iowa, reports the Des Moines Register.

Regarding the company’s third-quarter earnings, TPI CEO Bill Siwek told reporters the company was confident in its future prospects.

Newton economic development officials told the newspaper they hope the project will eventually reinstate all of the 700 employees laid off late last year, but those jobs would not be added immediately. TPI plans to restart production at Newton in 2024, and hiring isn’t expected to begin for a few months.

Iowa gets the highest percentage of its power from wind of any US state, about 58% last year, the register reported.

Image Credit: Stockr / Shutterstock.com

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This fall, towns and rural farms along the Mississippi River received alarming news about their drinking water. Chemicals from a large 3M plant north of Cordova, Illinois have found their way into the river and their wells.

The factory employs around 500 people and manufactures the adhesives used in post-it notes, masking tape and other popular products. It also produces a family of chemicals called PFAS, otherwise known as the “forever chemicals,” whose threat to human health has caused growing concern among federal and state environmental agencies.

Water and wastewater sampling by the U.S. Environmental Protection Agency in 2019 detected the chemicals. Now the agency says the drinking water of nearly 300,000 people, including the Quad Cities of Illinois and Iowa, will require further testing to ensure it is safe.

Earlier this month, the EPA announced that PFAS contamination at the 3M plant had created “imminent and substantial endangerment” to public and private drinking water supplies. In a Nov. 2 EPA order, Minnesota-based 3M agreed to investigate PFAS contamination in private wells and public water systems up to 10 miles from the plant.

The situation has left local officials with a dilemma: they want to reassure people about their drinking water, even as they face unanswered questions about health risks and who will pay to clean up contamination.

Municipal officials in Camanche, Iowa, announced in September that municipal water, which serves nearly 4,600 people, tested positive for two of the chemicals above EPA limits.

The city advised residents to contact their health care providers or consider installing home filters. Now, officials are telling water customers that the city is seeking “expert advice” from state and federal officials and will provide more information as it becomes available.

“At this time, we are in a ‘test and wait’ phase on the PFAS issues,” Gaylon Pewe, Camanche’s director of public works, wrote on the city’s website. City officials did not respond to a request for an interview.

Their announcements did not allay the fears of several residents of Camanche, who on social networks reacted with dismay to the latest statement from the city. Is the water drinkable, asked several people.

Workers at the Co-op’s only UK coffin factory have entered their second week on strike.

The Bogmoor Place facility in Glasgow saw around 50 staff walk out after Unite members previously voted to strike in August.

The workers rejected an offer from the company, which they described as a pay cut in real terms due to high inflation rates.

The second week of the strike began on Monday and will continue until Monday November 21.

The ongoing strike, which could continue through the Christmas and New Year period if no agreement is reached, could disrupt the supply of coffins.

Unite regional manager Willie Thomson said: ‘Our members remain resolute and determined as they embark on a second week of strike action in a bid to secure a fair pay deal at a time of the greatest cost crisis life for decades.

“Without planned discussions with the employer, this dispute will continue to risk a significant disruption in the supply of caskets at a time when seasonal death rates are highest.

“Unite expected more from an organization that carries the Co-op brand. A brand whose values ​​are linked to mutual aid, democracy and fairness. They should re-examine these principles and ask themselves if they are still valid because my members think they are not.

“It’s time for Co-op Funeralcare to step up and make a wage offer that doesn’t let its workers, our members, potentially access food banks.

Co-op Funeralcare said in a statement: “Our colleagues at our coffin factory in Glasgow are a hugely valued part of our co-op and we have had an ongoing dialogue with Unite as we strive to reach a reasonable wage agreement.

“We remain open to discussions to try to reach an agreement and have informed Unite.

“Despite the difficult business environment, we have offered all our colleagues in the coffin factory a fair salary increase. We believe that the combined base salary and production bonus for roles within the Casket Factory remains very competitive.

“We are able to maintain a large supply of caskets. As well as our own factory, we work closely with a range of third-party coffin suppliers and can therefore offer full assurance that the strike has no impact on our ability to support bereaved families.

By Kaoru Onodera, Yokogawa Electric Technology Marketing

As society and the economy globalize and commercial values ​​shift from goods to information, the international community faces challenges such as the explosion of data, difficulties in knowledge transfer, decarbonization and sustainable development goals. New technologies such as artificial intelligence (AI), robotics and the Internet of Things (IoT) can help solve these challenges, but there are also concerns that they threaten safety and security and cause new problems such as job insecurity.

Under these circumstances, developed countries have initiated activities aimed at building a global social and economic ecosystem. The most striking examples are “Shaping Europe’s Digital Future” proposed by the European Commission, its related project GAIA-X and Society 5.0 as promoted by the Japanese government. The manufacturing industry is also responsible for responding to social and economic changes, and the concept has been discussed internationally. This article introduces the Digital Factory framework, an international standard that specifies core technologies to achieve smart manufacturing.

Smart manufacturing and international standards

Smart manufacturing is a concept that represents a common international understanding of the ideal state of the manufacturing industry, spanning the manufacturing value chain and the entire life cycle of products and production systems. Smart manufacturing aims to create new added value by using digital technology and connecting a wide variety of systems. To achieve this, the systems must not only be connected but also comprehensible to each other. ISO and IEC, which are both international standards organizations, define smart manufacturing as: “Manufacturing that improves its performance aspects through integrated and intelligent use of processes and resources in cyber spheres, physical and human resources to create and deliver products and services, which also collaborates with other areas within business value chains.

Collaboration with management information is essential to improving manufacturing performance, and the ultimate goal of a business is to improve its management performance through this collaboration. This can only be achieved when all elements of the supply chain work together. Since the manufacturing industry has become deeply globalized, its supply chains are not limited to a single country but extend all over the world. Therefore, to achieve smart manufacturing, it is necessary to establish universal definitions and rules independent of language, culture, country, region, industry, type of company and role. In other words, smart manufacturing requires international standardization.

Its importance in smart manufacturing is evidenced by the fact that international standardization is positioned as the heart of Industry 4.0, which is Germany’s initiative to achieve smart manufacturing, and that the EU and many other countries such as the United States, China and Japan have expressed their support for this initiative. International standardization is an important measure to achieve smart manufacturing. It is important that companies and consortia work on smart manufacturing independently and from the bottom up.

However, if they proceed without considering international standardization, they can become internationally isolated. In such a state, they cannot collaborate with companies and customers from other countries, so smart manufacturing only applies to a specific region or technology. The concept of semantic interoperability, which can avoid international isolation and achieve global collaboration, is attracting major attention in international standardization to achieve smart manufacturing.

The Challenges of Achieving Semantic Interoperability

Semantic interoperability is described in “Semantic Interoperability: Challenges in the Age of Digital Transformation” as “The ability of computer systems to exchange data with shared and unambiguous meaning” plus “A requirement to enable logic, inference, knowledge discovery and data federation between information systems.

Of course, this includes the ability of machines to not only understand themselves, but also to make information understandable to humans. Semantic interoperability is the ability of systems with different architectures, using different languages ​​and protocols, to exchange information and use it without compromising its meaning. In other words, the systems not only connect to each other, but also understand each other regardless of differences in language, culture, country, region, industry, business category and role.

Semantic interoperability is an essential element to achieve intelligent manufacturing.

As manufacturing continues to globalize, supply chains that cross company and country borders are common. For example, a company in France designs a product, companies in Bangladesh and Brazil manufacture its parts, a company in China assembles them, and a company in Japan brings the finished product to market. The tools and mechanisms used by each company in this supply chain generally have architectures adapted to the culture of each country. If this supply chain is fixed, this collaboration can be maintained through the efforts of the companies involved.

However, we are in the era of VUCA – volatility, uncertainty, complexity and ambiguity – full of unexpected incidents such as the COVID -19 pandemic, natural disasters, political changes and technological innovations. This puts supply chains at risk of sudden disruption for virtually any business. In response, a global system must be in place to select the most appropriate supply chain elements at all times and implement them with minimum time and effort, not only within a company or a specific supply chain, but also from a variety of open options independent of implementation technology.

To enable flexible horizontal collaboration and optimize the value chain, it is necessary to integrate information throughout the life cycle of products and production systems (from planning and design to disposal) and to allow each stakeholder to use the information transparently. This is achieved through semantic interoperability. Currently, the following obstacles hinder the establishment of semantic interoperability:

· Decentralized information: information on manufacturing systems is scattered in various documents, drawings and lists

· Fragmented information: even if digitized, information is stored in different software systems and needs to be re-entered or converted for use in other systems

· Isolated information: data updates in one system are not automatically reflected in the other systems

Currently, significant human intervention is required to achieve this state of operation. Meanwhile, digitization has caused an explosion of information and the amount of data already exceeds the capacity of human beings to process it. Semantic interoperability should free people from this flood of information. This is a fundamental problem to solve in order to achieve smart manufacturing.

Next week, in part 2 of this feature, we explore some of these solutions. Stay tuned…

President Joe Biden wrapped up a campaign trail in San Diego County on Friday at satellite internet provider Viasat – touting his administration’s work to further boost U.S. semiconductor manufacturing

In a low-key and mostly nonpartisan speech to Viasat employees and local Democratic lawmakers, Biden focused on his administration’s economic achievements, particularly the $52 billion CHIPS and Science Act that garnered bipartisan support for the Congress.

Biden spent Thursday and Friday in California campaigning for U.S. Representative Mike Levin, who is locked in an increasingly tight race with Republican Brian Maryott for California’s 49.^e District headquarters as voters worry about inflation and the direction of the economy.

The president told Viasat of Carlsbad because about 10% of the company’s 7,000 employees are veterans. Viasat is also headquartered in the 49th arrondissement and provides in-flight satellite Internet access to Air Force One and other government VIP aircraft.

The CHIPS and Science Act channels $39 billion in subsidies to semiconductor manufacturing in the United States, as well as a 25% investment tax credit on capital expenditures.

The legislation also earmarks $13.2 billion for technology research and workforce development.

Biden said the legislation “will energize our efforts to manufacture semiconductors here in America. It has spurred a huge response in private sector investment across the country – more than ever before in such a short time. Hundreds of billions of dollars.

Micron, a memory chip maker, announced plans to invest $100 billion in new manufacturing capacity in upstate New York. Intel has opened a $20 billion chip factory near Columbus, Ohio. IBM announced a $20 billion investment in the development of artificial intelligence and quantum computing technology in New York’s Hudson River Valley. Global Foundries is also targeting more than $4 billion under the CHIPS Act to expand production, also at a New York plant.

American companies remain leaders in the design of complex semiconductors. Qualcomm of San Diego is the leading developer of mobile chips for smartphones. Nvidia develops high-speed graphics processors for video games. Apple has made inroads with high-performance central processors for computers and phones.

But these chip designers don’t manufacture, in part because building complex semiconductor fabs costs billions for the complex lithography and other equipment needed to deliver the most advanced chips.

Instead, chip designers outsource manufacturing to companies that specialize in making advanced processors, such as Taiwan Semiconductor Manufacturing Corp. (TSMC) and Samsung.

Today, the United States produces about 10% of the world’s semiconductor supply, up from 30% in the 1990s. Asian manufacturers now produce about 75%.

“It’s also a matter of national security,” Biden said. “Earlier this year I went to a Lockheed factory in Alabama where they make Javelin missiles. Guess what? They were having trouble getting the Javelin missiles to Ukraine because they didn’t have the chips. We we need semiconductors not only for these Javelins but also for other weapon systems that exist today and in the future.

Viasat designs semiconductors for several products, ranging from satellite internet equipment to National Security Agency-certified encryption devices for the U.S. government, said Craig Miller, head of the $1.1 billion government services arm. from Viasat.

It also outsources manufacturing. The expansion of the production supply chain in the United States provides the company with security and predictability, he said.

“Additionally, having a national capability allows us to work on special projects or classified programs that require a very secure semiconductor,” Miller said. “Not having to relocate it and have it made in America is really good for us and really good for the country.”

Semiconductor makers worldwide are expected to invest $150 billion in capital expenditure this year, said industry expert Handel Jones, founder and chief executive of International Business Strategies. So $39 billion over a few years in the CHIPS Act is a relatively small amount.

“But I think it’s a good start,” said Jones, who also praised the research money. “The negative that we also see is the significant political issues involved. California senators don’t seem engaged. Schumer is very active, so he makes quite a bit of money for New York.

Handel was referring to Senate Majority Leader Chuck Schumer, D-New York.

Handel added that Qualcomm of San Diego may be seeking research funding under the CHIPS Act for its work on 6G wireless communications, automotive artificial intelligence and image processing, among others.

“They’re doing some really innovative things right now in terms of new generations of technology,” he said.

A Qualcomm spokesperson said the company “applauds the cooperation and persistence in this legislation, which will help strengthen America’s supply chains and maintain its leadership in research and development – at the heart of growth, our country’s competitiveness and security”.

Biden said the CHIPS Act aims to address the research funding gap in the United States in recent years.

“Decades ago in the United States of America we used to invest in ourselves,” he said. “America has invested 2% of its gross domestic product in pure research and science. Over the years we have moved away from that. We invest 0.7% of our GDP in science and research.

“Does anyone here think the future doesn’t lie in major breakthroughs in technology and science?” He asked. “Other countries are quickly approaching. The CHIPS and Science Act puts us on the path to further progress.

PARIS, Nov 2 (Reuters) – Activity in France’s manufacturing sector weakened in October more than initially expected, according to a monthly survey, as inflationary pressures weighed on the eurozone’s second-largest economy.

The final S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 points in October from 47.7 in September. A flash forecast for October’s manufacturing PMI came in at 47.4 points.

Readings above 50 points show growth while those below 50 show contraction.

The final October manufacturing PMI reading was the lowest since May 2020, after the global economy was hit by lockdowns imposed to deal with the first wave of COVID-19.

Manufacturers also suffered in October due to a sharp drop in new orders, S&P Global added.

“The volume of new inputs purchased fell sharply in October as companies adjusted to the negative economic outlook. supply and demand that has driven up inflation, we’re still seeing historically high price pressures,” said Joe Hayes, senior economist at S&P Global Market Intelligence.

“The fall in natural gas prices across Europe over the past few weeks will be a relief for French manufacturers, as anecdotal evidence suggests that energy remains the main driver of cost pressures at present,” Hayes added. .

Reporting by Sudip Kar-Gupta; Editing by Hugh Lawson

Our standards: The Thomson Reuters Trust Principles.

Growing economic needs, Chinese ambition and hard cash give China an increasingly strong presence in Latin America. Underlying reasons for China’s success include China’s domestic demand for Latin American agriculture, mining and commodities, and the failure of the United States to take concerted interest. to the region, as well as political unrest in Washington. The old idea, enshrined in the monroe doctrinethat Latin America is “America’s backyard”, over which it could dominate, has been relegated to the dustbin of history.

The Monroe Doctrine has been superseded

It’s hard not to be impressed by the scale of China’s growing economic footprint in the region. Last year, China’s trade with Latin America reached $450 billion compared to $180 billion in 2010. According to the World Economic Forum, “on the current trajectory, LAC-China trade is expected to exceed 700 billion dollars by 2035more than double that of 2020.”

As a result, China is now the biggest trading partner for many South American countries, including Peru, Chile and Argentina. This is a particularly impressive feat, considering that at the turn of the century in 2000, Chinese trade with the region was just 2%.

Chinese trade with the region is boosted by trade in natural resources and raw materials that the Asian giant needs for its growing economic footprint and its agricultural products – like the soybeans needed to sustain its massive population.

It’s not just trade

Diplomatic, cultural, military, financial and investment ties are everywhere. Twenty of the 33 nations in Latin America and the Caribbean have joined China’s Belt and Road Initiative. Some of the signing ceremonies have been accompanied by pomp and circumstance, such as Argentinian President Alberto Fernández’s visit to China earlier this year when he attended the Winter Olympics in Beijing and held a grand signing ceremony with President Xi Jinping.

The BRI partnership opens the door not only to greater trade but also to investment, as among other things the agreement facilitates the “Chinese banks and companies …to finance and build roads, power plants, ports, railways, 5G networks and fiber optic cables around the world. Chinese investment in the region has also increased rapidly, especially in strategic sectors such as mining and power generation. In 2020, China’s foreign direct investment in the region amounted to $17 billion, with most concentrated in a few countries like Brazil, Argentina and Mexico.

China has also become one of the main lenders to major oil-producing countries in the region, such as Venezuela and Ecuador. Chinese investments have focused on extractive industries, but according to the IMF, they are “increasingly directed towards manufacturing and service industries such as transport, electricity, financial services and information technology. and communication (ICT)”.

COVID diplomacy

Beyond trade and investment, China has engaged in aggressive diplomacy in the region at a time when US leaders were looking elsewhere. During the COVID pandemic, China has been rushing to provide many countries in the region with Vaccines made in China against the coronavirus as well as PPE equipment. President Xi has also been a frequent visitor to the region, making 11 trips to Latin America since 2012, compared to one trip for former President Donald Trump and none for President Biden.

Beyond trade and investment, China has engaged in aggressive diplomacy in the region at a time when US leaders were looking elsewhere.

While China has stepped in to bring needed investment and trade to the region, its presence comes at a price. The Chinese regime does not prioritize democracy or civil rights, and investments often come at the expense of poor environmental, labor and human rights standards. A report by the Collective on Chinese Finance and Investment, Human Rights and the Environment found that “many projects supported by China are also among the most flagrant violators of human rights and environmental law. They neglect the needs of local and indigenous communities and contribute to deforestation and pollution.

While China has the economic muscle and the strategic desire to maintain a long-term presence, it also has challenges in the region. One of the main ones is the awareness created by the pandemic that new supply chains must be diversified and geographic proximity suppliers is not as negligible as one might think.

US nearshoring is a counterweight to Chinese dominance

There is a new bipartisan will in the US Congress and the White House to expand US investment in the region to potentially develop manufacturing supply chains closer to the continental United States. And the Latin governments seize it: Just listen to Caribbean governments explain to American manufacturers the benefits of setting up their next factory just four days by boat from Miami. Such a move would help boost US investment in the region and create new economic interdependence.

US regulators are increasingly focused on slowing China’s tech expansion, with new laws now restricting both exports and imports. This puts further pressure on Latin governments to be cautious about the technologies they buy from China.

The United States could do more to strengthen and utilize the benefits of its close cultural ties to the region, developed over decades of closeness and the large number of Latin American immigrants to the United States. Miami is a win-win situation, a phrase popular with Chinese government officials.

The United States must look beyond immigration

There is a growing choir of voices in the United States warning of the need for a more robust response to China’s presence in the region, but a thoughtful US program for the region is sorely lacking. Ask any Latin American government official and you’ll be infuriated by the languid responses of US government counterparts to threats and opportunities in the region.

The U.S. focus on Latin America must go beyond a concern with immigration to consider creating new forms of trade and investment that take the current relationship to a new level. . Chief among them is how to position the US trade relationship in areas such as renewable energy, strategic minerals, such as lithium, and information technology. Focusing on these growing and innovative sectors will open new doors.

NEW YORK, OSLO, Norway and LUXEMBOURG–(BUSINESS WIRE)–October 27, 2022–

FREYR Battery (NYSE: FREY) (“FREYR”), a developer of next-generation clean battery cell production capabilities, announced a new service agreement with ITOCHU Corporation (“ITOCHU”), global trading and import/export company. Under this agreement, ITOCHU will serve as a direct material supplier for FREYR’s procurement and supply chain operations.

“We are delighted to partner with ITOCHU, and we intend to leverage their shipping, planning and production expertise as we establish, nurture, decarbonise and localize our supply chain in full growth. ITOCHU has an extensive global network of trusted material suppliers, which we believe will bring significant benefits to FREYR as we cooperatively source and evaluate high quality materials,” said Dr. Tilo Hauke, EVP Supply Chain Management , FREYR.

“As the world moves towards decarbonization, we see FREYR as an integral part of building a clean and sustainable lithium battery industry. Supply chain will be a critical part of their journey to greater speed and scale in the market, and we look forward to helping them source raw materials to meet their growing needs,” said Yasuhiro Abe, COO of Power & Environmental Solution Division, ITOCHU.

FREYR and ITOCHU previously entered into a memorandum of understanding in 2020, which outlined a mutual intention to explore potential opportunities in lithium-ion battery production and related operations. As FREYR approaches initial production at the customer qualification plant, the two companies are deepening their collaboration to secure the raw materials needed for FREYR’s planned giga-scale battery production.

Both ITOCHU and FREYR are investors in 24M Technologies, Inc., FREYR’s US-based technology licensing partner. The 24M production platform is designed to enable significant reductions in capital expenditure, plant footprint, energy consumption and raw materials.

About FREYR battery

FREYR Battery aims to provide industrial-scale clean battery solutions to reduce global emissions. Listed on the New York Stock Exchange, FREYR’s mission is to produce green battery cells to accelerate the decarbonization of energy and transport systems on a global scale. FREYR has begun construction of the first of its planned plants in Mo i Rana, Norway, and announced the potential development of industrial-scale battery cell production in Vaasa, Finland, and the United States. FREYR intends to install 50 GWh of battery cell capacity by 2025 and 100 GWh of annual capacity by 2028 and 200 GWh of annual capacity by 2030. To learn more about FREYR, please visit www.freyrbattery.com.

About ITOCHU Corporation

The history of ITOCHU Corporation dates back to 1858 when the company’s founder, Chubei Itoh, started linen trading operations. Since then, ITOCHU has evolved and grown for 150 years. With around 100 bases in 62 countries, ITOCHU, one of the leading sogo shosha, engages in domestic trade, import/export and overseas trade of various products such as textiles, machinery, metals, minerals, energy, chemicals, food, general trade. commodities, real estate, information and communications technology, and finance, as well as business investment in Japan and overseas. For more information, visit: www.itochu.co.jp.

Caution Regarding Forward-Looking Statements

All statements, other than statements of current or historical fact included in this press release, including, without limitation, statements regarding ITOCHU’s ability to serve as a direct supplier of materials for procurement operations and FREYR’s supply chain; FREYR’s ability to derive significant benefits from ITOCHU’s extensive global network of trusted material suppliers through cooperative sourcing and pricing of high-quality materials; the essential role of FREYR in the establishment of a clean and sustainable lithium battery industry; the role of the supply chain in achieving greater speed and scale in the lithium battery market; FREYR’s ability to carry out initial production at its customer qualification plant in Mo i Rana, Norway; and the ability of the 24M production platform to enable significant reductions in capital expenditure, plant footprint, energy consumption and raw materials are forward-looking and involve risk and significant uncertainties that could cause actual results to differ materially from expected results.

Most of these factors are beyond FREYR’s control and are difficult to predict. Information on factors that could materially affect FREYR is set out in the “Risk Factors” section of (i) FREYR’s registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC” ) on September 1, 2022, and (ii) FREYR’s Annual Report on Form 10-K filed with the SEC on March 9, 2022, available on the SEC’s website at www.sec.gov.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20221027005063/en/

CONTACT: Investor contact:

Jeffrey Spittel

Vice President, Investor Relations

[email protected]

Tel: (+1) 281-222-0161Media contact:

Catherine Berntsen

Vice President, Communications and Public Affairs

[email protected]

Tel: (+47) 920 54 570

KEYWORD: LUXEMBOURG UNITED STATES JAPAN NORTH AMERICA ASIA PACIFIC EUROPE NORWAY NEW YORK

KEYWORD INDUSTRY: BATTERIES SUSTAINABILITY ENVIRONMENT ALTERNATIVE ENERGY ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) ENERGY PROFESSIONAL SERVICES TECHNOLOGY

SOURCE: FREYR Battery

Copyright BusinessWire 2022.

PUBLISHED: 10/27/2022 06:01 AM/DISC: 10/27/2022 06:02 AM

http://www.businesswire.com/news/home/20221027005063/en

On a dusty stretch of the deafening road from Chennai to Bangalore are three colossal and anonymous buildings. Inside, away from the din of traffic, is a high-tech facility operated by Foxconn, a Taiwanese manufacturer. A short drive away, Pegatron, another Taiwanese tech company, has erected its own vast new factory. Salcomp, a Finnish gadget maker, installed one nearby. Further west is a 500-acre campus run by Tata, an Indian conglomerate. What these jealously guarded facilities have in common is their client: a demanding and secretive American firm known locally as “the fruit company”.

The proliferation of factories in southern India marks a new chapter for the world’s largest technology company. Apple’s extraordinary success over the past two decades – revenue up 70 times, share price up 600 times, market value $2.4 billion – is in part the result of a big bet on China. Apple has banked on China-based factories, which now make more than 90% of its products, and courted Chinese consumers, who in some years have contributed up to a quarter of Apple’s revenue. However, economic and geopolitical changes are forcing the company to embark on a hasty decoupling. Its hijacking of China marks a big shift for Apple, and is emblematic of an even bigger shift for the global economy.

Apple’s packaging proclaims “Designed by Apple in California,” but its gadgets are assembled along a supply chain that stretches from Amazonas to Zhejiang. At the center is China, where 150 of Apple’s largest suppliers operate production facilities. Tim Cook, who was Apple’s chief operating officer before becoming chief executive in 2011, pioneered the company’s approach to contract manufacturing. A regular visitor to China, Cook has maintained a good relationship with the Chinese government, obeying its requirements to remove apps and keep Chinese user data locally where it is available to authorities.

Now a change is afoot. Mr Cook, who has not been seen in China since 2019, is courting new partners. In May, he received Vietnamese Prime Minister Pham Minh Chinh at Apple’s futuristic headquarters in Cupertino. Next year, Apple is set to open its first physical store in India (where Prime Minister Narendra Modi is a fan of gold iPhones).

Both countries are the main beneficiaries of Apple’s strategic shift. In 2017, Apple listed 18 major vendors in India and Vietnam; last year it had 37. In September, to much local fanfare, Apple began manufacturing its new iPhone 14 in India, where it previously only made older models. The previous month, it was reported that Apple would soon start manufacturing its MacBook laptops in Vietnam. Some of Apple’s new gadgets show how things are done. Nearly half of its AirPods are made in Vietnam and by 2025, two-thirds will be, JPMorgan Chase predicts. The bank estimates that while today less than 5% of Apple’s products are made outside of China, by 2025 that figure will be 25% (see Chart 1).

As Apple’s production system evolves, its suppliers are also diversifying outside of China. A crude measure of this is the share of long-lived assets that Taiwanese tech hardware and electronics companies have located in China. In 2017, the average figure was 43%. Last year, that number had fallen to 31%, according to our estimates based on company and Bloomberg data.

The most pressing reason for the scramble is the need to spread operational risk. Two decades ago, the garment industry ramped up operations outside China following the SARS outbreak, which crippled supply chains. “sars has made it clear to everyone operating in China that there needs to be a ‘China+1’ strategy,” says Dominic Scriven of Dragon Capital, a Vietnam-based investment firm. Covid has taught the same lesson to tech companies. Lockdowns in Shanghai in the first half of this year temporarily closed a factory operated by Quanta, a Taiwanese company, which was supposed to make most of Apple’s MacBooks. Customers had to wait months. According to JPMorgan Chase’s Gokul Hariharan, avoiding this kind of chaos is the “main driving force” of Apple’s supply chain moves.

Another motive is cost containment. Average salaries in China have doubled over the past decade. In 2020, a Chinese manufacturing worker typically earned $530 a month, about twice as much as a worker in India or Vietnam, according to a survey by JETRO, a Japanese industry body. India’s heavy infrastructure, with poor roads and an unreliable power grid, has held it back. But it got better and the Indian government sweetened the deal with subsidies. Vietnam also offers tax breaks and holidays, as well as free trade agreements, including one recently signed with the European Union. Bureaucracy around visas and customs remains a pain. But the work ethic is similar to China’s: “Confucius always gets them out of bed in the morning,” says a foreign executive in Vietnam.

Apple is also increasingly considering locals as potential customers, especially in India, the world’s second-largest market for smartphones. Apple’s gadgets are too expensive for most Indians, but that’s changing. In July, Apple announced that its revenue in India had almost doubled in the last quarter, year-on-year, driven by the “engine” of iPhone sales.

This diminishes the relative importance of China as a consumer market. At its peak in 2015, China accounted for 25% of Apple’s annual revenue, more than all of Europe. Since then, its share has steadily declined, reaching 19% so far this fiscal year (see Chart 2). At the sound of it, Xi Jinping, the Chinese president, would like him to fall more. During a Communist Party shindig on Oct. 16, he called for “self-reliance and strength in science and technology,” suggesting foreign importers may face stiffer competition from domestic champions Chinese. He repeated the phrase five times.

This highlights the final, but potentially most important, reason for Apple’s change: geopolitics. Growing tensions between China and America have made China an increasingly difficult place to do business. Heightened Chinese political sensitivity has added friction on many fronts. This summer, for example, Apple should have asked Taiwanese manufacturers to label their products “Made in Chinese Taipei” to appease the new fussy Chinese customs (at the risk of angering the Taiwanese).

America, for its part, has become more aggressive in its competition with China’s domestic tech industry. On October 7, America announced a ban on “us” from working for certain Chinese chipmakers. On the same day, he added 30 Chinese companies to a list of “unverified” companies that his officials had been unable to inspect. Apple has reportedly been close to signing a deal to buy iPhone memory chips from one such company, ymtc, which can offer low prices thanks in part to a Chinese government subsidy. Following US export controls, that deal was frozen, according to Nikkei, a Japanese newspaper.

The question is whether physically moving production out of China will be enough to avoid future crackdowns. Even though Apple manufactures more of its gadgets outside of China, it still depends on Chinese companies to build them. Chinese manufacturers such as Luxshare, Goertek and Wingtech are taking an increasing share of Apple’s business beyond China’s borders.

Luxshare and Goertek are said to manufacture AirPods in Vietnam, helped by the fact that some Taiwanese rivals, such as Inventec, have reduced their work for Apple in recent years. Indian media reported in September that the Indian government may allow some Chinese companies to establish production facilities in India. Chinese companies’ share of iPhone electronics production will rise from 7% this year to 24% by 2025, estimates JPMorgan Chase, which predicts that over the next three years Chinese companies will increase their production share in the Apple product line.

Could Chinese manufacturers outside of China be targeted by US sanctions? For now, that is unlikely, said Nana Li of Impax, an asset manager. “There is no practical alternative [suppliers] available with the same level of experience, efficiency and profitability,” so cutting them would hurt American businesses, she points out. Over time, this could change. Countries like India and Vietnam want to develop their own suppliers. Tata is said to be in talks with Wistron, a Taiwanese manufacturer, to manufacture iPhones in India. Indian manufacturers report that the “fruit company” is quietly looking for local suppliers.

Given the direction of America’s relationship with China, it certainly makes sense for Apple to make some side bets, before the restrictions go any further. Chinese companies outside China are safe for now, says Western investor in Asia. But “the noose is tightening”.

© 2022 The Economist Newspaper Limited. All rights reserved.

From The Economist, published under licence. Original content can be found at https://www.economist.com/business/2022/10/24/the-end-of-apples-affair-with-china