Apple increases R&D in China with two lab expansions

AppleInsider

Apple is significantly increasing its R&D facilities in China, with the expansion of an applied research lab in Shanghai and a new lab constructed in Shenzhen.

Shanghai [Pexels/Wolfram K]

Apple's research and development spending is huge, having forked out approximately $7.7 billion in Q1 2024 alone. In a continued expansion of its R&D efforts, it is making two moves to its operations in China.

One will be the expansion of an existing applied research lab in Shanghai, which is used to improve the materials and construction of Apple's products and components, reports China Daily.

The other will be an all-new lab located in Shenzhen, which will be opening later in 2024. Also an applied research lab, it is said that the facility will help support employees in the region as well as increase the collaboration with local suppliers.

The Shenzhen lab addition is anticipated to help improve Apple's testing capabilities for major products, including the iPhone, iPad, and Apple Vision Pro.

"We have already invested 1 billion yuan ($139.4 million) into applied research labs in China," said Apple Greater China VP and managing director Isabel Ge Mahe. "And with the new expansion plan, our investment will continue growing."

Ge Mahe said that the number of Apple R&D staff in China has doubled in the last five years.

The research lab announcement occurs during a time when Apple is enduring difficulties in the Chinese smartphone, due to the rise of local vendors such as Huawei in the region.

Apple is also preparing to open its eighth Shanghai Apple Store, with the Apple Jing'an location arriving soon.



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blastdoor

Seems very unwise. So much for de-risking. 

I find it disturbing that Apple seems to get along much better with the CCP than with the EU. I think the EU is often off target, but they are at least opposed to genocidal maniacs. The CCP declares forever friendships with genocidal maniacs. 

What exactly are apples values?

beowulfschmidt

I can't help but wonder why Apple would locate research facilities in a country that has a such lackluster record of protecting IP.  Is the cost of doing it there that much less expensive as to make it worth it?

blastdoor

beowulfschmidt said:

I can't help but wonder why Apple would locate research facilities in a country that has a such lackluster record of protecting IP.  Is the cost of doing it there that much less expensive as to make it worth it?

I suspect they are just caving to CCP demands, hoping that iPhone sales will go back up. 

The scary thing to me is -- it's possible that Apple has caved to a lot of other CCP demands that we have simply never heard about. 

Or if they haven't yet, there's always the risk that they will. If CCP wants to cut Apple's market cap down to billions rather than trillions, they can do it. Apple has truly made a deal with the devil. 

neoncat

blastdoor said:

What exactly are apples values?

Money. Which, I mean, is not some huge surprise or unexpected plot twist. It's just that Apple is two very different beasts: A massive corporate machine, one of the largest ever created, who's success makes it beholden to large swaths of the economy that expect it to keep producing returns and keep growing, and a formidable yet paper-thin construct of marketing, cuddly and beloved, representing every protected class, representing American entrepreneurism, representing the environment, representing creativity, representing... A whole host of things no corporation should ever take the place of in the hearts and minds of its customers. 

The two heads are often going to push in opposite directions, serving their masters. I agree with Blastdoor. For every concession and move on the chess board we hear about with regard to Apple and China, I'm sure there are 10 more we never will.

edited March 2024

9secondkox2

More money funneled to China…

yay

blastdoor

neoncat said:

blastdoor said:

What exactly are apples values?

Money. Which, I mean, is not some huge surprise or unexpected plot twist. It's just that Apple is two very different beasts: A massive corporate machine, one of the largest ever created, who's success makes it beholden to large swaths of the economy that expect it to keep producing returns and keep growing, and a formidable yet paper-thin construct of marketing, cuddly and beloved, representing every protected class, representing American entrepreneurism, representing the environment, representing creativity, representing... A whole host of things no corporation should ever take the place of in the hearts and minds of its customers. 

The two heads are often going to push in opposite directions, serving their masters. I agree with Blastdoor. For every concession and move on the chess board we hear about with regard to Apple and China, I'm sure there are 10 more we never will.

Re money vs other values.... I wonder if it's harder for everyone who isn't Steve Jobs to resist the money pressure. SJ saved the company and made shareholders a ton of money -- he could pretty much do whatever he wanted, and he stacked the board with his people. One example of how SJ could resist money pressure but TC can't is the dividend and stock buybacks. SJ hated dividends and buybacks. He wanted to hold onto the cash and wait to use it for something productive. But as soon as he was gone, the money guys went to TC and demanded their dividends / buybacks. TC caved pretty quick, but likely had little choice but to cave. 

I'm not in any position to know, but my hunch is that SJ and many Apple employees (probably including many in senior management) have values other than "squeeze every last drop of [profit out of this thing." BUT -- they don't own the company, nor do they have SJ-level credibility with shareholders. And so they cave in the name of short term profits. Maybe not as much as other companies, but they do. 

It would be interesting to see how Apple operated if it were a 100% employee owned firm. I bet there would be some noticeable differences. 

dewme

beowulfschmidt said:

I can't help but wonder why Apple would locate research facilities in a country that has a such lackluster record of protecting IP.  Is the cost of doing it there that much less expensive as to make it worth it?

What you’re saying is a legitimate concern. No matter how amazingly competent, innovative, and “loyal” your colleagues in a country of concern may be, if there is a general lack of concern around IP control and ownership in said country, you are at great risk. In such countries the speed and scope at which IP leaks will likely proliferate should they get through your InfoSec barriers make R&D in these countries a case of swimming in shark infested waters with a bloody open wound. 

I have some experience in this area and have often worked with some of my teammates in countries of concern. They were totally awesome on all levels, personal and professional. But like any collection of human beings there can be bad actors in the mix. It only takes one. And that one may attempt to hold IP hostage or try to blackmail your company. In these cases you’re at the mercy of how diligent the authorities in those countries are to your concerns. 

To manage InfoSec risk you have to put extensive barriers and air gaps into your security planning and implementation. Most developers in less risky environments would be appalled by the levels of restrictions, for example disallowing any external internet access at all and disabling all I/O ports on computers, cameras everywhere, locked security zone, keystroke and screen recording, roving security guards making sure you don’t leave anything laying out, etc. Even the in-office environment for developers may have to VPN into their “inside” workstations from a different computer that has external access. This effectively doubles your computer budget. 

Okay, so you put all these InfoSec controls in place. You think you’re safe. But then someone, perhaps someone in the media chatting with a disgruntled employee, finds out that critical components and/or code in your larger product is being developed in a country of concern, and publishes their discovery to the world. Suddenly your stock price plummets and the Feds start knocking on your door and are asking questions that have nothing at all to do with how much money your company is saving by using offshore R&D. Again, it only takes one bad actor or one bad event to trigger the shit avalanche your company is about to get buried under. 

edited March 2024