Apple turns away from China

Apple is moving away from China and to places like Vietnam, India and elsewhere to diversify its supply chain, especially in assembly, after the Chinese Communist Party’s quixotic lockdown for COVID-19 in search of the unattainable “zero COVID dream”. “, among a host of other problems, threatened the company’s ability to manufacture products in a predictable and timely manner.

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

The Economist:

The proliferation of factories in South India marks a new chapter for the largest technology company in the world. Apple’s extraordinary success over the past two decades – 70x higher revenue, 600x share price, $ 2.4 trillion market value – is in part the result of a big bet on China. Apple has focused on China-based factories, which now churn out more than 90% of its products, and has courted Chinese consumers, who have contributed up to a quarter of Apple’s revenue in a few years. Yet economic and geopolitical changes are forcing the company to initiate a hasty decoupling. His departure from China marks a big change 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 center is China, where 150 of Apple’s largest suppliers operate manufacturing facilities. Tim Cook, who was Apple’s chief of operations before becoming CEO in 2011, pioneered the company’s approach to contract manufacturing. A regular visitor to China, Cook has maintained good relations with the Chinese government, obeying its requirements to remove apps and keep Chinese user data locally, where it is available to authorities.

Now a change is underway. Mr. Cook, who hasn’t been seen in China since 2019, is courting new partners. In May, he entertained Vietnamese Prime Minister Pham Minh Chinh at Apple’s futuristic headquarters in Cupertino. Apple is expected to open its first physical store in India next year (whose prime minister, Narendra Modi, is a fan of gold iPhones) …

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

MacDailyNews takes: Better late than never.

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

Apple can’t give up its addiction to China quickly enough (because it started years too late). – MacDaily News. August 17, 2022

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

Former US President Richard Nixon, who opened relations with China in the early 1970s, shortly before his death in 1994, noted about China: We may have created a Frankenstein.

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