The increased geo-political tensions involving influential global nations is more and more spilling over into supply chain sourcing and business policy dimensions.
A published report by The Wall Street Journal this week indicates that both Apple, and contract manufacturer Foxconn are: Getting Caught in Taiwan Tensions With iPhone Supplier Probes. (Paid subscription)
Earlier this week, the contract manufacturer indicated it was cooperating with Chinese government authorities regarding reported tax and land use probes that are underway.
The probes were reportedly announced after Apple CEO Tim Cook made a second visit to China to meet with senior leaders and tour various Apple stores and a manufacturing site unrelated to Foxconn. Cook’s second visit in as many months is being attributed to a Chinese government ban on the use of latest models of iPhones in certain government agencies and state-owned companies. The report additionally indicates that the latest announced iPhone 15 has experienced disappointing sales in the country after domestic competitor Huawei Technologies stunned the market with the introduced 5G capable Mate 60 smartphone.
This report ties the announcement of the government probes to both the manufacturing contractor services provider’s efforts to help Apple shift the sourcing of components and manufacturing to areas in India and Vietnam.
A further recent announcement that the contract manufacturer’s original founder, Terry Gou has announced a second bid in being a political presidential candidate for the island of Taiwan in its forthcoming election adds to the ongoing political backdrop.
In 2019, Gou gave up his chairmanship of Foxconn after announcing a Taiwan presidential bid. His candidacy was subsequently not successful in the election.
The Journal report indicates that Gou favors closer ties with Beijing, but a Chinese media report indicates that his candidacy is likely to “further divide’ Taiwan’s opposition camp. The report goes on to indicate observations from political observers that Gou might be viewed as a hostage of Beijing, along with Apple itself.
The report acknowledges that: “Apple is also seeking to unwind its reliance on Foxconn, entrusting the making of its newest products to other suppliers.”
Joint Nvidia and Foxconn Announcement
In what we believe is a soon to be related development, last week, GPU chip producer Nvidia and Foxconn jointly announced in Taiwan, a partnership to build termed “AI factories,” a class of super powered data centers that would provide supercomputing capabilities to accelerate the development of self-driving automobiles, industrial robots and autonomous machines.
This development follows a partnership announcement in January among the two companies involving Foxconn becoming a supplier of advanced electronic control units for automakers.
The contract manufacturer had previously announced a strategy in targeting three strategic manufacturing platforms involving smart electrically powered vehicles, smart manufacturing and smart cities.
According to a published report from TechCrunch, the AI factory will be based on an Nvidia GPU computing infrastructure purposely: “built to process, refine and transform vast amounts of data into valuable AI models and information.”
The LLM based data would provide the basis for an advanced AI brain within a vehicle that could interact with drivers and passengers.
The report points out that while Tesla currently utilizes an Nvidia GPU based supercomputer to power vehicle navigation, the Tesla Dojo supercomputer, which started production this summer with a Tesla proprietary designed GPU will be utilized to power Tesla’s full-service advanced driver (FSD) assistance system.
This week, the U.S. Commerce Department indicated that it is considering restrictions to prevent the sale of some advanced artificial intelligence chips to China, over concerns they could be used for military development purposes. The restrictions are reportedly aimed at the export of Nvidia ‘s A800 and H800 chips.
Our readers may recall that Foxconn is a designated manufacturer to build the next models for premium U.S. based EV automaker Fisker. The contract manufacturer also had consummated a partnership with start-up Lordstown Motors, but that manufacturer has since filed for bankruptcy, blaming Foxconn on delays in services and payments as a primary reason for the filing.
With the heightened geopolitical and trade tensions that surround China, the U.S. and other nations, it would seem that Nvidia and Foxconn may be subject to added scrutiny, depending on the IP protections of GPU LLM technology and what countries and what markets Foxconn ultimately decides to source these advanced technology platform factories. With announced partnerships with China based EV automakers alone, the international lawyers are likely to be busy.
© Copyright 2023, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.