In 2016, Apple’s “Operations Genius,” Tim Cook, secretly signed a secret agreement with the human rights-abusing Chinese Communist Party estimated to be worth more than $275 billion. Cook promised that Apple would do its part to develop China’s economy and technological prowess via infrastructure investments, business deals, and worker training in exchange for the CCP quashing its surge of what promised to be crippling regulatory actions against Apple, The Information reported last December.
Many years before that, some two decades ago, it was Cook who spearheaded Apple’s move to make products “Designed in California,” but “Assembled in China.”
Since Cook, 62, made his $275 billion secret deal with the CCP five years ago, and as he now nears retirement age, Apple has made precious little headway in diversifying its production away from capricious, authoritarian China.
If the $275 billion wasn’t to buy Apple half a decade to free itself by diversifying its production away from China, mitigating risk, what was it for?
With little warning, China locked down the world’s largest iPhone factory on Wednesday, declaring the zone around the Zhengzhou Foxconn Technology Group complex off-limits to combat a local Covid-19 outbreak. It’s the last thing Apple Inc. needed.
The abrupt move is expected to further disrupt a factory already grappling with an outcry over an on-site coronavirus outbreak, worker exodus and enforced quarantine. Local authorities said Wednesday that they’ll sterilize Foxconn’s campus and the surrounding areas in the next three days and send N95 masks to workers, another sign of the government’s tightening grip.
It served up a stark reminder of the dangers for Apple of relying on a vast production machine centered on China in a time of unpredictable lockdowns and uncertain trade relations… Apple is by far the largest business to adopt China as its factory floor.
Much now depends on the length of the lockdown, which is intended to last for a week until Nov. 9, but officials elsewhere in China have extended such actions for weeks, sometimes months, at a time.
MacDailyNews Take: Longtime Apple analyst Gene Munster on Tuesday estimated that it would take as long as a decade for Apple to reduce its current near-total reliance on China to meaningful levels.
At the current rate, it doesn’t look like Apple has 10 months, much less 10 years to extricate itself from China.
Tim Cook painted Apple into this corner. It worked marvelously well, until it didn’t.
A publicly traded company CEO’s job is to act in the best interest of its shareholders.
But, Apple’s operations don’t scream “genius” today. They scream “RISK!” But, you know, the market just loooves risk*.
One year ago today, Apple’s share price was $151.28. It closed today at $145.03. Dead money. Why? Mostly Apple’s dependence on China which is terminally obsessed with sparing twenty-three-year-olds** a case of the sniffles in a quixotic quest for the “zero-COVID” pipe dream. (You’d think interning dissidents into concentration camps would take up too much of the CCP’s time. Alas, no.)
Apple shareholders and, in turn, Apple’s rubber-stamping Board of Lackeys, should hold one person responsible if this spiraling China dilemma continues deteriorate: Timothy D. Cook.
So, what’s Cook’s plan for getting the company out of this boxed-in predicament into which he placed it? Certainly Apple shareholders have a right to know. Hopefully, Cook has a better plan than simply cashing out and dumping this nightmarish quandary into the lap of Apple’s next CEO.
**The average age of a Foxconn worker is 23
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