Apple Inc. (AAPL)
Hon Hai, the world’s largest electronics contract manufacturer, is the American technology giant’s most important manufacturing partner. It will fully support Apple if it needs to adjust its production as the US-Chinese trade row gets grimmer and more unpredictable, board nominee and semiconductor division chief Young Liu told an investor briefing in Taipei on Tuesday.
“Twenty-five per cent of our production capacity is outside China and we can help Apple respond to its needs in the US market,” said Liu, adding that investments are now being made in India for Apple. “We have enough capacity to meet Apple’s demand.”
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So what comes next? Accepting America’s trade terms will be hard. China can probably retain its role as a global production hub but only if it pays financial tribute for the privilege. It will be allowed to develop hi-tech firms like Huawei but the keys to the technology will stay in the US, Germany, Japan and South Korea.
It will be able to send its armies of tourists and their renminbi to make friends. But it will only be able to buy raw materials if the US agrees. It must gradually open its markets and stop subsidising industries, while accepting the slow beat of the democracy drum.
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