Every year, Warren Buffett releases a letter to Berkshire Hathaway shareholders. It lays out what worked, what didn’t, and where the company is headed. No spin. No marketing campaign. Just the truth.
Josh Fairbairn is doing the same thing for hardware manufacturing.
This week, Morpho published its annual Mode of Operation letter.
Manufacturing companies don’t usually publish letters like this. The industry operates in shadows, suppliers hidden behind NDAs, processes locked behind closed doors, failures rarely discussed outside of emergency meetings.
Fairbairn is operating from the lens of transparency and building trust at the same time.
“If you want to build something real, you have to be honest about what it takes,” Fairbairn said in a recent conversation. “That’s what this letter is. It’s the truth about what we’re doing and why.”
The Mode of Operation letter covers three priorities for 2026-2027: Build Fewer, Better Products; Strengthen the Morpho Platform; and Expand Internal Brands. But beneath the strategy is a deeper argument about what it means to build in China today.
The Narrative on China Manufacturing Is Changing
China became the world’s factory floor because it could deliver something no other country could: enormous volumes at the lowest possible cost. Brands went to China because it was the capability decision that made sense.
But that was then.
In 2025, China contributed approximately 30% of global manufacturing added value, maintaining its position as the world’s largest manufacturing powerhouse for 16 consecutive years (China Briefing). Made in China 2025 achieved over 86% of its targets across ten key sectors. The initiative fully succeeded in electric vehicles (nearly 10 million units sold in 2023 vs. 3 million target), solar panels (80% of global production), and renewable energy (1,200 GW wind/solar capacity achieved), while robotics saw partial success with China installing over half the world’s industrial robots but not meeting the 70% domestic production target. (source)
The narrative is changing. China isn’t just cheap labor anymore. It’s advanced manufacturing, supply chain density, and production capability that no other country can replicate at scale.
“Very few people were trying to build great ones,” Fairbairn writes. “Morpho was built to fill that gap: not sourcing, but actually building.”
Quality Engineered Since the Beginning
This is the core of Morpho’s philosophy, and it’s the heart of the Mode of Operation letter.
“Great products are not sourced,” Fairbairn writes. “They are built from scratch.”
Sourcing means finding the cheapest factory. Building means engineering quality into every step of the process, from design for manufacturability analysis before tooling begins, to individual component inspection through the Component Control Method, to rigorous quality standards defined before a single unit is produced.
“When Morpho works on a product, the goal is simple: Build the best version of that product in its category,” Fairbairn writes. “Not the cheapest. Not the fastest. The best.”
For hardware founders considering manufacturing in China, the letter is a roadmap. It explains why Morpho exists, what they believe, and how they approach every project.
It also explains who Morpho works best with.
“Morpho works best with founders who care deeply about their product,” Fairbairn writes. “The ideal Morpho founder obsesses over details, listens to engineering feedback, understands that great products take time, values quality over shortcuts.”
Bottom Line
The Annual Mode of Operation letter is honest about what Morpho doesn’t do. They’re not the right partner for founders shopping purely on price, for commodity products with no differentiation, for unrealistic timelines, or for founders looking for validation instead of truth.
“There are plenty of companies that can help with commodity products,” Fairbairn writes. “Morpho is for the highest quality, and often complex products.”
“Morpho is not trying to build the most products,” Fairbairn writes. “We are trying to build the right products. Products that are well designed. Products that are well engineered. Products that deserve to exist.”
