Manufacturing on a global scale

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Once upon a time, Apple manufactured Macs in the US, and I once saw a Mac that had been made in Ireland, of all places. But pretty soon Apple manufacturing switched to Asia.

For quite some time, Apple has also sourced most of components for its products in lower-cost Asian countries. That's not entirely the case any more, according to a Reuters' article.

Samsung Electronics, responsible for manufacturing Apple's A5 chip used in the current generation iPhone 4S and iPad 2, is now being manufactured in the great state of Texas. Samsung's new US$3.6 billion facility, which is said to be the size of nine football fields, reached full production in December.

Some manufacturing has been trickling back to the US as the Asian middle class grows. And if it is growing, thank goodness - America needs the jobs, too.

Meanwhile, the situation with some of Apple's Asian suppliers still seems a bit volatile. Literally, in some cases: Apple Inc supplier Pegatron Corp's plant which belongs to Pegatron subsidiary Riteng Computer Accessory Co, was rocked by an explosion before Christmas, and that's just the latest in a series of incidents that spotlights safety concerns at supplier factories.

The explosion at the plant in Shanghai's Songjiang industrial park injured 61, including 23 workers who had to be hospitalised.

In Apple's defence, it's not the only company that uses suppliers like Pegatron, with many other PCs and devices being manufactured alongside for other vendors in many situations.

In Apple's disfavour, the wealthy Californian firm continues to use plants with poor safety records, unacceptable self-harm rates, oppression of non-unionised workers (and indeed, suppression of unions) and third world wages. Despite international outcries, Apple has continuously failed to make things noticeably better years after concerns were first raised.

I've mentioned before that, worldwide, hard drive prices went up due to floods in Thailand affecting production. About 40 per cent of hard drive production is in that region, devastated by out-of-control flooding in October. I mentioned this might affect Apple Macs; at least that Apple's introduction of so-called Solid State Drives (SSDs - much faster storage chips with no spinning platters and read-write heads, unlike hard drives) across the Mac line might be accelerated by the floods. And indeed, rumours continue to percolate about a new iPad (3) in 2012, and even mysterious new laptops with different cases.

'Different cases', to me, shouts SSD drives - that's why the MacBook Air is so slim, after all. A hard drive needs a strong chassis, cooling, extra power and shock mountings. By comparison, a chip needs very little like that, and it's much smaller and lighter besides.

Strangely, when I wrote about the floods, I got told off in the comments for not going into greater detail about the human impact of them.

Hey, that would be journalism. This is a tech blog. I had no intention to belittle human suffering at all, and indeed I did mention it, but that's hardly in my brief to blog about Apple.

But that hardware crisis appears to be over now - prices of hard drives are already beginning to go down again.

According to new information from ecommerce tracking site Dynamite Data, the top 50 hard drives on sites such as Newegg.com and Tigerdirect.com leaped in price by 50 to 150 per cent after the flooding. The price jump started in October when drive inventory levels plummeted 90 per cent in less than a week. Now those price premiums are falling away as production ramps back up.

I noticed just this morning in a large Auckland electronics store, a 2TB hard drive listing for NZ$249 last week is now $199.

Meanwhile, hard drive manufacturer Seagate Technology has completed the acquisition of Samsung Electronics' hard drive business, having recently received approval for the deal in Australia, China, and the European Commission. Seagate said in April it was acquiring the HDD business of Samsung Electronics for US$1.4 billion in stock and cash.

So Seagate grabbed a hard drive builder for all that money, despite HDs being on the way out? Um, clever ...

Apple is already the world's largest consumer of flash memory. By contrast to Seagate, Apple has just paid US$500 million for the consumer-grade flash memory maker Anobit.

The half-billion dollar price tag tops Apple's acquisition of NeXT back in 1997 - inflation-adjusted, that apparently adds up to US$472 million in today's money. But it's still way below Seagate's acquisition.

The Anobit deal may give Apple key advantages over rivals. Not only do many Apple devices also rely on flash memory for storage, Anobit manufactures the sort of inexpensive MLC flash memory that can keep device costs down. So the purchase gives Apple access to cheaper solid-state memory that may be more reliable than other suppliers. Flash memory's main drawback is still cost.

But what about plant security? I guess it's the same anywhere - I mean, once the penny drops in China and disenfranchised rural poor combine with the pissed-off urban sweatshop workers, who knows what can happen there?

It's already a bizarre situation - rampant capitalism flourishing under a command economy ethos (aka communism). Not to mention the shakiness that North Korea continually represents to the region, along with its worrying regime change.

For Anobit is based in Israel, surrounded by hostile Islamic nations in - seemingly and especially nowadays - constant turmoil. (And no, I'm not seeking to belittle that, either. Just saying.)

And Apple will also reportedly will build a research centre in Israel, its first outside the United States.

Perhaps it is just good business. I mean, anything could happen anywhere, right? Who knows what craziness humans are capable of next. Not to mention climate change, the Euro, debt ... But would other buyers queue for Apple flash memory? Would it be endowed with the same halo that shines on other iProducts? That's what MacRumors hopes.

Meanwhile, the iPad has been losing ground against competitors. Apple's share of the global tablet market slid in the quarter ending September 30th, from 63.3 to 61.5 per cent, according to a new report from IDC.

Sounds bad? Not really. Apple shipped 11.1 million tablets during the quarter, over 10 million more than its next-closest competitor Samsung, which shipped only one million units of all Galaxy tablet models.

Ah caramba, the world is in turmoil. But I hope you are not. I hope you had a good Christmas (or whatever you do).

- Mark Webster mac-nz.com