How Apple Boosts Chinese Suppliers With Know-How From Foreign Companies
When Apple signs a contract with a supplier, it typically owns all of the manufacturing processes related to its products, from polishing methods to recipes for materials. That has given it a key advantage for getting new—and cheaper—suppliers up to speed.
In March at an event in China, Apple CEO Tim Cook mingled with the founders of several major Apple suppliers in the country, including Lens Technology, which makes the protective glass screens for iPhones. “It’s the partnership between Apple and Chinese companies that really makes things happen,” Cook told Chinese state media in an interview. “We make it where one plus one equals three instead of two.”
What Cook didn’t say is how Apple is able to make such miraculous math happen: To cut manufacturing costs, Apple often builds up Chinese suppliers using the manufacturing know-how it has obtained through other companies from more developed countries that charge more for the technology.
Lens is a striking illustration of that. A decade ago, an American company called GT Advanced Technologies, which Apple was working with to develop a new scratch-resistant screen material, filed for bankruptcy protection. Apple subsequently shared the recipe for that material—which it co-developed with GTAT and owned under their contract—with Lens and a Hong Kong–based glass maker, Biel Crystal, according to three former Apple employees familiar with the project. In the years since, Apple has similarly shared information about Biel’s manufacturing processes for other materials with Lens and generally played the two companies off each other to get better prices on components, say multiple former employees at Apple, Lens and Biel.