Apple turns away from China

Apple is turning away from China and towards place like Vietnam, India, and elsewhere to diversify its supply chain, especially in assembly, after the Chinese Communist Party’s quixotic COVID-19 lockdowns in quest of the unattainable “zero COVID” pipe dream, among myriad other issues, threatened the company’s ability to manufacture products in a predictably, timely manner.

Quality assurance, iMac production, China (Image via Apple's Supplier Responsibility 2020 Progress Report)
Quality assurance, iMac production, China (Image via Apple’s Supplier Responsibility 2020 Progress Report)

The Economist:

The mushrooming of factories in southern India marks a new chapter for the world’s biggest technology company. Apple’s extraordinarily successful past two decades—revenue up 70-fold, share price up 600-fold, a market value of $2.4trn—is partly the result of a big bet on China. Apple banked on China-based factories, which now churn out more than 90% of its products, and wooed Chinese consumers, who in some years contributed up to a quarter of Apple’s revenue. Yet economic and geopolitical shifts are forcing the company to begin a hurried decoupling. Its turn away from China marks a big shift for Apple, and is emblematic of an even bigger one for the world economy.

Apple’s packaging proclaims “Designed by Apple in California”, but its gadgets are assembled along a supply chain that stretches from Amazonas to Zhejiang. At the centre is China, where 150 of Apple’s biggest suppliers operate production facilities. Tim Cook, who was Apple’s head of operations before he became chief executive in 2011, pioneered the company’s approach to contract manufacturing. A regular visitor to China, Mr Cook has maintained good relations with the Chinese government, obeying its requirements to remove apps and to hold Chinese users’ data locally, where it is available to the authorities.

Now a change is under way. Mr Cook, who has not been seen in China since 2019, is wooing new partners. In May he entertained Vietnam’s prime minister, Pham Minh Chinh, at Apple’s futuristic Cupertino headquarters. Next year Apple is expected to open its first physical store in India (whose prime minister, Narendra Modi, is a fan of gold iPhones)…

The most pressing reason for the scramble is the need to spread operational risk.

MacDailyNews Take: Better late than never.

It’s smart for both Apple and Foxconn to diversify assembly outside of China. There’s no sense having all of your eggs in one basket.MacDailyNews, April 2, 2019

Apple cannot divest their dependence on China quickly enough (because they started years too late).MacDailyNews. August 17, 2022

Diversify, diversify, diversify – especially away from CCP-controlled China.MacDailyNews, October 19, 2022

Former U.S. President Richard Nixon, who opened relations with China in the early 1970’s, just before his death in 1994 remarked on China: We may have created a Frankenstein.

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14 Comments

  1. Apple is not learning. Moving from one hostile evil communist regime (china) to another (Vietnam) is absolutely repeating their basic business 101 mistakes of failing to properly diversify.

    Stop propping up evil human rights abusing communist regimes. Reward places that are developing with potential to lift up people, which communists never will do.

    India is a good start. But it is ESSENTIAL to also build capacity in america. Then maybe Eastern Europe. Brazil. But american production of iPhones and Macs, at least say 5% of the volume, is essential.

    That they do not is a failure of their fiduciary duty in basic business operations and the shareholders should PERSONALLY sue Cook and others responsible for such bad management.

    Apple needs a chef, but all they have is one lousy cook.

    1. My impulse is to agree with you, and trade is something I don’t know about. But maybe, just maybe, is not the root cause solution to the illegal immigration and refugee problem to help people stay in their countries?

      This would require a foreign policy that respects other countries sovereignty. That’s not us.

      1. cynic: you must be kidding. The current administration doesn’t respect OUR OWN sovereignty; hence the suicidal open borders crap.

            1. Don’t bother, cynic and vertitas are the two stupidest people here.

              Absolute idiots. The really funny thing is that they actually think they are smart. LOLOLOLOLOL. More proof that stupid people are too stupid to know they are stupid!!!!!

  2. China’s “quixotic” COVID policy is not really about COVID. COVID is the cover to maintain government lockdowns indefinitely. At least until China’s financial crisis eases. Population control.

  3. Now Apple needs to move away from the Democrat Party whose sole mission now is to turn America from a free democratic republic into a communist/fascist tyranny just like China or Cuba or Nazi Germany. Leaving China does no good if your HQ is in the People’s Republic of California.

  4. The move away from China can also be looked at in strictly economic terms. With all corporations searching for low-cost labor markets, the move away from China coincides with the (slow) growth of China’s middle class. As wages rise in China, companies will be shifting production to even lower-wage countries: hence, Vietnam and India.

    Forget about moving production back to America, except for perhaps capital-intensive facilities where labor costs are a relatively small fraction (computer chips, EV batteries, etc.).

    Long term, after India and the others replace China, what will eventually replace India? The only place left: sub-Saharan Africa. Give it 20-30 years, and you’ll be reading about the new Foxconn/Apple factories in Zaire (taking advantage of the ports and infrastructure being built right now by, you guessed it, China).

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