Has Apple CEO Tim Cook made Apple too dependent on China?

The Dow Jones Industrial Average is slumping Thursday afternoon with shares of Dow Inc. and Apple seeing the biggest losses for the index. This has led some observers to ask if Apple CEO Tim Cook has made Apple too dependent on China.

Cook, since joining Apple more than 20 years ago, is famous for having “transformed Apple’s supply chain, relying on China to manufacture devices with the help of low-cost, skilled labor, and to ship those products around the world,” as Mark Gurman wrote just this morning for Bloomberg News.

For this, Cook is called an “operations genius” by some.

Apple dependent on China. Image: Apple's 5-day stock chart
Apple’s 5-day stock chart

MarketWatch:

Shares of Dow Inc. and Apple Inc. are contributing to the index’s intraday decline, as the Dow was most recently trading 560 points, or 2.1%, lower.

Dow Inc.’s shares are down $1.72, or 4.0%, while those of Apple Inc. have declined $12.49 (4.26%), combining for a roughly 90-point drag on the Dow.

MacDailyNews Take: We like to break Betteridge’s law of headlines even more than Tim Cook likes to put all of Apple’s eggs in one basket. Imagine if Apple had over the past several years invested some of the $400 billion they’ve spent on buybacks on diversifying production, you know, in case of trade issues, natural disasters, health emergencies, foreign government actions, etcetera? The good news is that with Apple so dependent on China, every time China catches a cold, we get a nice irrational discount sale on Apple shares.

19 Comments

  1. What a silly question. The current V, trade wars and China’s central planned economy (which include authoritarian rules, absconding others IP and playing illusively in the global markets) are all reasons answering the question conclusively.

    It was a good run, though.

  2. Yes. Cook is a globalist idiot. Philosophically, at least, there is little resemblance between today’s Apple and that of even 15 years ago. Cook is a buffoon and a hypocrite.

      1. Which proves Cook’s incompetence.

        The Mac on its own could, and should, make as much as Microsoft makes. But that would require somebody at Apple paying attention to legacy customers and working with business clients instead of slow walking out precanned overpriced consumerware.

    1. Your answer is no answer at all? Do you care to expand upon the details of your post? Where else would you suggest Apple make their products? Any good ideas?

  3. Isn’t most of the tech industry too dependent upon China. The CoViD-19 virus could be considered a natural disaster and no one has control over something like that. Blaming Tim Cook for something he has no control over doesn’t seem fair. I’m sure most of Apple’s big investors are happy that manufacturing is being done in China where there is plenty of manpower and factories geared for that precise type of production and assembly. It would seem convenient to have factories and component suppliers relatively close together rather than scattered all around the globe. I’m not happy that China has got Apple by the gonads, but I know the positive reasons why.

    This virus incident is just an unfortunate thing and maybe in the future things will change by putting suppliers and plants in places other than China. I still believe if Apple did have other production and assembly facilities, something could still go wrong. Earthquakes, floods, tsunamis, hurricanes, volcanic eruptions, civil and government unrest and the like could still cause problems in the supply chain. Blaming Tim Cook alone for this temporary production slowdown/stoppage doesn’t make much sense to me. I don’t think Apple can foresee every little thing that can go wrong. Sometimes bad luck can manage to creep in and make a mess of things. CoViD-19 could theoretically end up in many countries around the world, so maybe no place will be safe aside from the North or South Poles and no one is building factories in those frigid regions of the world.

    1. I think you are correct, in a sense…TC made a business choice much of the world has made in re: to manufacturing. China isn’t the largest manufacture in the world just b/c of Apple. Apple would have never scaled as it has, w/o China abilities.

      On the other hand, just b/c the inertia to give biz to China makes sense in sooo many ways, doing business there is complicated waaay beyond the current issue with the V.

      There’s always a give/take in such a relationship, but China stands alone in the ‘take” dept. China is a very patient fox in the hen house and that never ends well for the hen.

  4. “Imagine if Apple had over the past several years invested some of the $400 billion they’ve spent on buybacks on diversifying production”

    Like to where… exactly. The world’s manufacturing powerhouse can barely keep up with Apple. I don’t think there is any other country – or combination of countries – that is remotely close to capable to do so.

    1. Amazing post! I agree. There is no other place/ country on earth that can compete with the manufacturing genius that is China. Everything is a well-oiled machine. The factory making the tiny screws or wire or whatever is “just across town” from the factory assembling all the pieces. Trucks are waiting for finished products. The harbor and airports are running 24/7. Endless manpower at the ready. “I don’t think there is any other country – or combination of countries – that is remotely close to capable to do do.” Well put!

  5. As far as COVID-19 goes, perhaps China was/is the right place for Apple
    manufacturing, as China (appears, so far) to have contained the damage
    within the country while the infection rate is increasing in Europe, US, and other parts
    of the West. Although containment may have been achieved via Draconian
    measures, the supply chain may now be safer there than elsewhere.

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