Patrick McGee

There is literally a teardown of every iPhone unit that gets built.

And what people will find is that there is a lot of Korean and Japanese and so forth parts.

But of course, what we don't know and what Apple essentially hides from us is how much of that work is actually being done in China.

So that's one thing that's going on.

The other thing is that the contributions of China have really gone from final assembly to more and more of the real estate, if you will, within the iPhone is Chinese.

So even companies like Foxconn, which, again, is Taiwanese, very important.

They're being squeezed in favor of a company called Luxshare, which is sometimes known as mini Foxconn.

LuxShare is a company that made less than $2 billion of revenue in 2017, the first year that they had an AirPods order.

I believe the last 12 months they made around $47 billion.

So just skyrocketing growth.

And Apple is estimated to be about 70% to 75% of their revenue.

So Apple has really brought up this supplier to take on Foxconn.

And it's just one of many Chinese companies that has become a giant, if not in terms of market cap and dividends to shareholders, then at least in terms of capabilities.

BYD, you probably know as a company that outsells Tesla.

They've been an Apple supplier since 2008.

They're a major assembler of iPads.

So there's this sense in which getting in on the ground floor of the iPhone supply chain

not only equips you for just enormous growth within Apple's own manufacturing network, but supplies you the skill sets and capital to expand into other industries.

And that's why Apple's played such an outsized role in Chinese industrial development.

So, yeah, there's absolutely leverage being exercised on the part of China.