A recent report from foreign media has once again sparked attention and discussion on how Apple's contract manufacturing automation will significantly reduce labor costs.
According to The Information, a paid technology media outlet in Silicon Valley, Apple has spared no effort in recent years to promote factory automation deployment in order to avoid the shutdown of Foxconn in 2022. It has requested that foundries reduce the manpower of iPhone assembly lines by 50% in the coming years.
As the main production area for iPhone assembly, a significant reduction in manpower on the assembly line in China will undoubtedly have a profound impact on the labor market.
Regarding the report on The Information, several industry insiders did not agree in an interview with China Business Daily that it was Foxconn's production suspension that led Apple into the process of automated iPhone production. Apple has been promoting automated production. As of the time of publication, Apple has not reported any related issues. Apple has always planned to try the iPhone assembly automation project, which was previously put on hold due to high costs. The shutdown of Foxconn has made Apple determined to implement automation projects, and the Apple iPhone 15 series has achieved a "large amount" of automation. However, due to the complexity of production, automation still poses challenges for Apple. The report pointed out that the "high defect rate" is the biggest problem in the current iPhone assembly automation project, which has led to Apple having to cancel some of the automation processes of the iPhone 16 series. Three people working in Apple's supply chain revealed that this year Apple continues to focus on and promote automation technology, and uses robots to install iPhone buttons, receivers, speakers, and main logic boards into the phone.
"This information is distorted and overly correlated with automation goals and factory manual adjustments," said Ivan Lam, senior analyst at Counterpoint. Ivan Lam told reporters that The Information report strongly links Apple's automation goals, Industry 4.0 trends, and factory manual adjustments, ignoring the complexity of park management and Apple's long-term vision of factory globalization and production automation.
Mr. Li, a senior figure in the labor industry, also told reporters that Foxconn automates every year, and the reduction in labor on the iPhone assembly line is closely related to Apple Automation. However, the 50% reduction is somewhat exaggerated.
In terms of the share of Apple's iPhone contract manufacturing, Foxconn holds the majority, followed by Asus. In recent years, Lixun Precision has begun to further increase its proportion in iPhone contract manufacturing.
As Apple's largest contract manufacturer, Foxconn has taken multiple steps in automation production lines in its early years, such as the construction of "light off factories" and "machine replacement". According to information disclosed by Foxconn, various workshops in the Industrial Fulian Jiyuan Park have achieved high automation and intelligence. Among them, nearly 500 equipment are operating normally in A03 and A05 workshops, but only more than 40 production technicians shuttle between each machine for inspection and maintenance. The number of employees at Foxconn's factory in Kunshan, Jiangsu was reduced from 110000 to 50000 due to the launch of this automation project.
In Ivan Lam's view, Foxconn has been gradually promoting production automation, but not all production lines can be upgraded in one step. Automation is the dismantling and gradual upgrading of each process.
Ivan Lam stated that starting from the iPhone 12 and iPhone 13, the basic version has a high degree of modularity. Each major module component is produced in China and then transported to global factories for simple assembly. This design trend has greatly reduced production processes, reduced production difficulty, and improved yield; At the same time, it also facilitates the increase in automation proportion in Chinese factories and facilitates the landing of local production in India, where manufacturing capabilities are in the initial stage.
Liu Zongchang, chief data officer of Foxconn Industrial Internet Co., Ltd., also responded recently: "Foxconn has more than 3000 people in its automation team alone, with an annual investment of more than 8 billion yuan in the automation integration of the whole line."
For example, Heshuo Technology, Lixun Precision, and Apple have also achieved results in precision manufacturing and automation. Heshuo Technology had already activated automated production lines in its Shanghai factory in the early years, with some production lines requiring only 20 people out of 50000 workers.
Li Xun Precision Chairman and General Manager Wang Laichun stated in 2023 that Li Xun Precision has a central automation team of 4000 people to meet the automation needs of customers in different products such as precision components, modules, and system assembly. Lixun Precision has deployed tens of thousands of precision automation equipment and tools to help Apple products such as iPhone, Apple Watch, AirPods, and Apple Vision Pro achieve high-quality production and manufacturing. From the high-precision assembly of iPhones, the automatic optical detection of Apple Watch, to the intelligent warehouse for automatic packaging and loading and unloading of products, Lixun Precision is actively utilizing the potential of intelligent manufacturing for data-driven decision-making.
According to Apple's annual supply chain report, the total number of full-time employees in its manufacturing partners has decreased from 1.6 million in 2022 to 1.4 million in 2023.
Apple believes that although automation has a large initial investment, in the long run, it can significantly reduce the demand for ordinary labor, achieve 24/7 operations, and theoretically reduce the production costs of iPhones and other products.
"Apple strictly controls supply chain costs, and assembly adjustments have limited impact on iPhone production costs. The main cost adjustments may come from chips and other components." In Ivan Lam's view, automation pursues a comprehensive improvement in cost-benefit, supply capacity, and quality. The short-term benefits may not be significant, but in the long run, efficiency improvement will bring significant benefits. Automation represents efficiency improvement and industrial upgrading, and all mobile phone manufacturers are optimizing the level of production line automation.
In Mr. Li's view, it used to be that Foxconn replaced people with machines at a rate of about 5% annually, which would have a certain impact on the reduction of employment. However, in recent years, due to the influence of the international situation, Foxconn and Asus have increased investment in the Indian region, and their efforts in domestic automation transformation may not be as strong as before.