TLDR: We are building Unplugged for the long term and mitigating risk across the entire business. To succeed, our startup, with a small, growing team must operate more nimbly than companies over a thousand times our size. This article considers multiple recent events and types of supply chain risk ranging from the Longshoremen strike to Hurricane Helene to over-dependence on China. It outlines how Unplugged is doing everything within our power to build resiliency and adaptability into our supply chain.
Supply Chain Risk: Big and Getting Bigger
We live in extraordinary times. Supply chain risk is fast becoming a major theme. There are literally hundreds of reasons a supply chain can be affected.
Take recent headlines for example:
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Today October 1st, 2024, dockworkers began a massive strike shutting down East Coast ports in the United States. Tens of thousands of members of the International Longshoresmen’s Association declined to report for work with the stated goal of “crippling” the economy until they get what they want – reportedly 77% increases in pay over the proposed new contract period. Yes, this is inflationary.
- Hurricane Helene hit the southeastern United States hard over the last few days, causing flooding which killed hundreds of people, destroying homes and businesses, wiping out railroad spurs, overwhelming dams and breaking up roads. The loss of life and property are heartbreaking. Our hearts, prayers and resources go out to the victims of this natural disaster. Of particular interest to our industry, the Spruce Pine Mining District is severely impacted. These are globally essential mines and home of the purest quartz on the planet which is critical to the manufacture of the crucibles involved in manufacturing silicon wafers that get cut into the chips used to build computers and smartphones.
Ariel view of Spruce Pine Mining District - Google Maps-
In the news just a week ago, members of terrorist group Hezbollah experienced a supply chain attack as thousands of their pagers and communication radios were unexpectedly exploded causing several dozen deaths and thousands of injuries. Hezbollah has terrorized northern Israel for years, and tens of thousands of the people who reside in Northern Israel have been displaced from their homes for the better part of a year due to bombing by Hezbollah. To fight back, Israeli intelligence infiltrated the supply chain for these devices coming out of Eastern Europe over the last few months. They found a way to pack small amounts of high explosives into the devices to architect this attack. Although much of our technology team lives in Israel, we witnessed this news with surprise and awe right along with our customers. We have strong opinions about this conflict, but we realize this development in warfare tactics strikes fear in the hearts of many people. It also highlights additional supply chain risk, and we are determined to mitigate every type of risk – including spy craft – to protect our customers.
- The big elephant in the supply chain room is China. The global technology sector is decidedly overdependent on Chinese manufacturing. For instance, members of the United States Congress, defense analysts and members of leadership of the U.S. military have warned about the extraordinary over-reliance on Chinese manufacturing for everything from weapons systems and communications tools to nuclear modernization and energy technologies.
These examples represent some of the more prominent supply chain events of recent days and weeks.
Although I could write thousands of words about supply chain risk and the process by which the UP Phone came to be a reality, let’s dive more deeply into the subject of China, so you can better understand our approach to these challenges.
Big Tech Relies on China. Let’s Change That.
China is a major competitor to the United States. There are a lot of reasons to admire China, but when it comes to privacy as a human right, China’s track record is abysmal. They have built a panopticon to monitor and control their own citizens, and they see this as key to maintaining single party power for the Communist Party.
China and their leading corporate interests have constructed a pervasive surveillance network leveraging cutting-edge technology, including facial recognition, artificial intelligence, big data, and advanced algorithms, designed to monitor and control the behavior of their citizens.
At Unplugged, we oppose this worldview. The fundamental rights of the individual must be upheld, and governments that do not respect these rights should be challenged.
What makes China uniquely positioned in the modern global economy is their share of global manufacturing dominates all the other nations, with the United States occupying a distant second place. China has become the sole manufacturing superpower.
China produces about 29% of the value added through manufacturing and more than 35% of the global manufacturing output. This is more than the next 9 largest manufacturing countries combined. 
Too many of the Big Tech companies, but especially Apple, are deeply entwined with Chinese manufacturing and even support Chinese State interests. This shouldn’t surprise us that some tech companies are willing to cozy up to authoritarian regimes. These companies have repeatedly shown they do not value human freedoms like the right to privacy and to free speech. So, for them, getting in bed with the Chinese government is perfectly acceptable and just part of doing business.
To be clear, at Unplugged, we don’t dislike the Chinese people. And it can be argued that one of the best ways to sustain cooperation and peace is to trade with other countries - including China. We advocate for this, but we simply believe the world, and the countries in the West have become overly dependent on Chinese manufacturing and technology. It is jeopardizing global security; this puts the world at more risk – not less. Even if it saves money, we aren’t willing to compromise our customers’ privacy and security by chasing the lowest bidder.
Unplugged’s Approach to Supply Chain Risk
Even though we are a small company, we must think and act like companies many times larger. At Unplugged, we have put in place multiple operational precautions to protect our supply chain.
- Prior to launch, we took a year of extra effort to build a supply chain that is NOT dependent on China. The UP Phone is manufactured in Indonesia, and we have full access and oversight on the factory floor. In full transparency, there are some non-core components of the UP Phone which are manufactured in China. With hundreds of parts, it’s almost unavoidable to build modern smartphones without the use of some Chinese parts. However, we have invested considerably in getting the core components and manufacturing processes out of China. We will be doing even more as we mature and iterate our product.
- We prioritize capital toward ordering in advance and to ensure adequate supply of our most important components. We made an advance order for tens of thousands of chips to be able to secure the chips which support our design. In fact, our advanced planning and the associated costs are one of the major reasons we are not yet on the Verizon network. It is very expensive to get verified by Verizon, and we had to make a choice with our finite resources. We know this decision cost us thousands of units of sales in the short run, but we are building with strategy and wisdom for the long run.
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We build strong relationships with our suppliers. Our CTO personally visits our major supplier’s facilities in Indonesia sometimes multiple times during the manufacture of each batch. We monitor, test and inspect the process.
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We actively monitor our supply chain. Members of our leadership team have made multiple visits to our state-of-the-art forward logistics partner facility in the Las Vegas, Nevada area to be onsite as our inventory arrives, to inspect it and to test it.
- We ship our flagship product by international air freight from Indonesia to the United States, and we use 2-Day FedEx to the consumer. To date, we have selected air freight for our UP Phone inventory to bring it into the United States from Indonesia. It is faster, safer and we can reliably monitor it over a few days instead of weeks. This removes much of the risk around interception and tampering.
- We lead with experience. Although Unplugged is a small company with less than 100 people on our team, our seasoned leadership have all been involved in prior, larger successful enterprises representing billions of dollars in commerce and manufacturing.
We know if we are going to be around for the long haul, we must act like it. We are grateful for the positive reviews we are receiving almost every day from our customers. They really buoy us on tough days. We appreciate the critical reviews too, because they help us improve.
At Unplugged, our promise to our customers is that we will fight to uphold the principles that support your privacy, both in the design of our software and hardware, but also throughout the full supply chain process.
Theron Harmon
CMO
Unplugged
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