Can Apple’s operations team handle this new crisis?

In Greek mythology, Zeus punished Sisyphus for cheating death by making him roll a huge boulder uphill for eternity. I suspect Apple’s operations teams feel cursed as well. Not only did they have to adapt to the pandemic, they had to mitigate the effect of the Russian invasion of Ukraine and now they have to do what they can to save business as the situation in Taiwan declineswhich could pose an existential threat to the company and its business.

The incredible journey uphill

It’s not just Apple, of course: the entire tech industry is threatened by tensions between Taiwan and China. The Apple Silicon chips used across its product range are manufactured by TSMC of Taiwan itself. TSMC chairman Mark Liu recently warned that any further tension in Taiwan would generate big problems.

Liu also noted the sophistication of the technology sector’s supply chain, telling CNN: “Because it is such a sophisticated manufacturing plant, it depends on real-time connection with the outside world, with Europe, with Japan, with the United States, from materials to chemicals, from spare parts to software engineering and diagnosis.”

When it comes to manufacturing, China’s importance to Apple’s supply chain was truly gained when COVID-related lockdowns prevented Apple from making enough Macs or iPads to meet demand. In that context, it seems counterintuitive that Apple told company staff this week that they no longer need to wear masks to protect themselves from COVID-19.

A risk to assumptions?

I guess the operations teams take heart that their ability to manage and execute Apple’s business in challenging market conditions still enabled the company to deliver record results in the recent quarter and anticipate growth in the September quarter. However, Apple CFO Luca Maestri was perhaps more realistic than he had hoped warned:

“Given continued uncertainty around the world in the near term, we are not providing any revenue guidance, but do share some directional insight based on the assumption that the macroeconomic outlook and COVID-related impacts on our business will not deteriorate from what we are projecting today for the current quarter.

Society must pray that relations between China and Taiwan do not deteriorate further. Such an outcome would devastate product manufacturing and create a terrible turmoil. FBI Director Christopher Wray recently warned that conflict between the two nations “would represent one of the most horrific business disruptions the world has ever seen.”

Can we diversify fast enough?

Apple is doing what it can to build a more resilient supply chain, but it’s an uphill journey. Digitimes suggests it is urging suppliers to set up manufacturing facilities in Vietnam and to diversify production into more factories. The company is also splitting the production of some products among other suppliers to help build resilience.

TSMC is is expected to open a $12 billion Apple Silicon manufacturing facility in Arizonawith assistance under the last past tense Chip law and science. But even that won’t be operational for at least a year. In most cases, Apple (and everyone but Apple) is still unable to diversify production outside of China, even if there were enough programmers and engineers in those markets to handle these machines.

However, the huge demand for Apple products means that factories in India, Vietnam and (possibly) Brazil And Mexico turn on the lights, they still can’t scale to meet all that demand. (The last Pegatron factory in Mexico won’t be online until end 2023according to local media reports.)

This is of particular significance as Apple prepares to introduce what it surely hopes will become its next “mainstay” product, the AR glasses, probably next year. It stands to reason that if those products appear, Apple will continue to rely on manufacturing from all of that region, generating even more headaches for that hard-working operations team.

Please follow me Chirpingor join me in the AppleHolic’s Bar & Grill And Apple Discussions groups on MeWe.

Copyright © 2022 IDG Communications, Inc.