Apple’s supply chain is difficult to dissociate from China

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  • Over the past few years, there have been increasing reasons for American companies to downplay their relationship with China. Former President Donald Trump’s Tariffs. Beijing’s strict his Covid lockdown. US-China conflict over Taiwan. Political Pressure on “Friend Shore” Supply Chains to Washington Allies.

The conclusion comes from a Bloomberg Intelligence analysis by Apple, which is looking to reduce its reliance on China. The Cupertino, Calif.-based company has already started production of several iPhone 14 models in India, earlier than usual for new models. Also, Apple’s biggest supplier, Foxconn Technology Group, recently agreed to expand its manufacturing facility in Vietnam with his $300 million.

But Bloomberg Intelligence estimates it will take about eight years to move just 10% of Apple’s manufacturing capacity from China, where about 98% of his iPhones are made. Many local suppliers make it especially difficult to break out of the world’s second largest economy, not to mention modern and efficient transportation, communications and power supply.

“Because China accounts for 70% of global smartphone manufacturing and major Chinese vendors account for almost half of global shipments, the region has a well-developed supply chain that is difficult to replicate, and if it does, Apple could lose access,” said a BI report by analysts Steven Tseng and Woo Jin Ho.

Of course, unexpected events such as Europe’s and America’s break with Russia are stark reminders of both the systemic risks of deep economic integration and the speed at which decoupling can occur. US political headwinds consistently oppose US-China integration. Under President Joe Biden, US$615 billion US-China trade ties turned into Cold War

One way he does this is by looking at toy and T-shirt manufacturers outside of China. But US technology companies have invested tens of billions of dollars over two decades in building complex production chains to provide the goods essential to the e-commerce boom. Dissolving these ties could take just as long and cause lasting damage to an already ailing global economy.

The pandemic then led to the introduction of President Xi Jinping’s strict virus containment policies, essentially banning travel and locking down large areas for an extended period of time. Rising tensions over US-Taiwan relations and China’s unprecedented scale of cross-strait military exercises are the latest focus of decoupling.

Scott Kennedy, senior adviser to the Washington-based Institute for Strategic and International Studies, said of decoupling, “There has been some momentum in that direction as a result of the trade war and the pandemic.” “The lockdown in Shanghai has been a monster acceleration, and the cross-strait crisis in early August has added fuel to the fire.”

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