Presentation Xue Ying Li International Management

Moving on, I will talk about the internalization of the production of Apple. Although
all Apple’s devices are designed in California of the United States, they are not
manufactured there. To answer the question of where they are produced, the two
concepts of manufacturing vs assembling must be distinguished. ‘Manufacturing’
defines the process of producing the parts that go into the device. Apple’s
manufacturers include 200 different companies which are located all around the
world and specialize in particular parts, for example for an Iphone, the accelerometer
is manufactured in Germany, the glass screen in the USA, and the camera in Japan.
Because of the big number of individual components in every Apple device, it is
impossible to list every manufacturer whose parts are found on the devices. On the
other hand, assembling is the process of taking all the individual manufactured parts
and combining them into a finished functional device. Apple only has two assembler
companies who are both Taiwanese, Foxconn and Pegatron. These companies have
factories in different countries, mainly in Asia due to cheap labor, including Thailand,
Malaysia, and the Philipines.

The largest production plant for Apple is Foxconn’s Shenzen location in China.
Despite the fact that China was responsible for 67% of assembly for Apple products
in 2021, Apple is aiming to diversify its production locations to not depend so highly
on China anymore due to disruptions during the Covid 19 pandemic and rising
tentions between USA and China. Apple has been testing more production sites in
India who at second place accounted for 16% of the global production in 2021 and
Vietnam at third place with 10%.

M&A
I will now be talking about the internalization of Apple’s mergers and acquisitions.
Apple’s M&A activity consists of a total of 108 companies which it has acquired, all of
which were add-on acquisitions meaning that Apple acquires these companies and
integrates them into its existing business. As you can see, on this map the M&A
activities are concentrated in North America and Europe.

64% of Apple’s acquisitions happened in the USA and the rest in 14 other countries.
The reason for this is the fact that these countries have more highly educated and
high-skilled workers. Apple’s objective for M&A is to acquire small technical firms for
its workers or small projects and turning them into big Apple projects. Apple’s largest
acquisition till this day is Beats of which Apple developed successful projects Apple
Music to compete with Spotify and the Apple Airpods. Recently, Apple has been
acquiring multiple firms from fields such as augmented and virtual reality (AR & VR),
artificial intelligence, maps, health, and semiconductors, signalling an increased
importance on those technologies. This is due to skilled AI workers being difficult to
hire as many companies want them. Example of such firms are the German AR firm
Metiao and artificial intelligence startup company from Finland called AI Curious.