The myth of Chinese Mobile Phone Supply Chain

So lots of folks want to dump Chinese phones for a variety of reasons, I am not getting into the validity of the reasons. But I do advise the  Indian security establishment occasionally, so my cognitive biases are clear !

Someone who does not have an  in-depth knowledge of a mobile phone supply chain should not really comment on this issue. I am not being arrogant here, it is just that it is a complex issue and while anyone can understand the intricacies of the supply-chain, you need to put in the effort to know the subject. I have been designing and setting up mobile phone supply chains for about 2 decades now, so have been around the block. India was actually designing high end mobile phones (by 2002) before the Chinese, a fact that is not common knowledge. So it is not as if the supply chain knowledge does not exist here. On to the present  ...


1. The core semicon part of the phone - Processors, DRAM, NAND, SPI Flash, Camera Sensor, Radio, Power.

Not aware of any major Chinese supplier. There is Spreadtrum and UltraSoC at the lowest end. Huawei uses Kirin but it is used only on Huawei phones. Most use Qualcomm or Mediatek. Second source components are used for power and some parts of Radio but there is zero Chinese dependence on this part of the component chain. Camera modules and lens are Chinese sourced typically but sensors are usually Sony or Samsung. Omnivision is out of the mobile phone game.
Bottom line - not a Chinese core competency area, so dependency is zero

2. The supplementary semicon part of the phone - WiFi/BT, NFC uC, sensors, sensor hubs (typically Cortex M based controllers), other uCs . Slightly more Chinese dependency for cost reasons and for simple uCs but again no real Chinese dependency. FP sensors are tied to display if in-display. You really want the best WiFi/BT chip-set on your phones and more importantly good FAE support, docs and drivers.So the point is obvious.

3. The camel in the tent ! Display and batteries. Again most major sources are non-Chinese (Samsung, Sony, Innolux, LG, Panasonic) but Chinese vendors like  but you get good and cheaper Chinese suppliers too. In fact China dominates LiIon manufacturing.The best I feel  is non-Chinese though but by 2021 given the push from the likes of CATTL, the gap will be non-existent. Here the issue is not supply chain but cost. If you can show value to your customer you can absorb the BOM cost increase. But if you sell your brand like rice cakes then dirt cheap is all you can afford. But with Tesla like Giga factories and large gen 10+ plants, I am puzzled as to why non-Chinese should be more expensive. It is not a labor intensive business.I suspect Chinese subsidies for CAPEX are the issue.In any case, these factories can be setup in ASEAN , India, Mexico to match Chinese cost for labor. 6 to 18 month effort at best. Glass is invariably Gorilla, which is Corning (US, China manufacturing ?). Alternative is Asahi (Japanese but manufactured in China)

4. Passive components, motors/vibrators ,connectors et al. Again major name brands are non-Chinese (Japaneses capacitors are to die for ! build  audio amps ) but as part of the kitting process, Chinese alternates usually win out. But there are enough plants outside China doing these, so switching is not an issue. the problem is that the supply chain for these is fragmented, so logistics pain is the main hurdle. In general the Chinese Eco-systems are like a Indian Mandi or a Middle Eastern Souk, it is a place where business congregates, so building a supply chain is easy. This is the true Chinese strength. But can be shifted fully to Singapore/Malaysia/Taiwan in 2 years time. earlier if we try.

5. PCB fabrication and assembly. Manufacturing for large volume is already moving out of China. PCB manufacturing is weird. The fancier materials from Rogers, Panasonic are non-Chinese but the final PCB manufacturing Eco-system is China. Never could figure out why. For large volume like phone, 6 months max to setup a plant anywhere. Where China is tough to replace is smaller PCBs and lower volume PCBs. Aggregation gives them economy of scale,so that will take time but that is not germane to the Mobile Eco-system

6. Mechanicals and Tooling. This is where the Chinese supply chain is tough to replace due to cost reasons. Labor cost matters here, so ASEAN and India are  good locations to relocate. And it is tooling, not the actual mechanical fabrication that is the issue. But I would ignore this for now and let the Chinese dependency stay in this area for a while. Not strategic enough.

To sump up, key components are not sourced from China. Less critical components may be manufactured in China but since supplier is not Chinese, shifting location is feasible. Lots of IC packaging happens in China (fabs are mostly non-Chinese. SMIC et al are not used by major semi-cons for class A components) but this is slowly shifting out. India will see packaging first and not fabs.


There are golden rules in being a phone OEM that most companies ignore at their peril. It is also the reason why they get stuck on a low cost death spiral.

1. Focus on value and quality, not cost
2. Build a brand that stands for something
3. Spend on R&D - at least 10+% of turnover
4. Focus on SW, not so much on HW
5. Keep model count very low
6. Support customers well, security updates for 5 years is a must, open up
as much as possible (if you use open source, make source accessible).

Remember, a 1 mm thinner phone is not going to get you more customers !

And if you can do the following, do it
1. If possible publish the schematics
2. have one model where you cater to the geeks. Dual SD slot, removable battery, easy OS jail break