Amaya Toman Apple has not had it easy in China for a long time now. Sales of iPhones are not doing well here, and disproportionately high tariffs have been imposed on exports from China to the United States, so the company is trying to be as little dependent on China as possible. But it looks like she just won't succeed.
Like many other companies in the United States, Apple has to rely on China to supply components for a huge number of its products. You can find the inscription "Assembled in China" on a wide range of devices from the iPhone to the iPad to the Apple Watch or MacBooks or accessories. Tariffs intended for AirPods, Apple Watch or HomePod will enter into force on September 1st, while the regulations regarding the iPhone and iPad will come into force from mid-December this year. Apple has very little time and options when it comes to finding an alternative solution.
Either raising the price of products in order to compensate for the costs associated with higher customs duties, or moving production to countries outside of China is under consideration. For example, the production of AirPods is apparently moving to Vietnam, selected iPhone models are produced in India, and Brazil is also in the game, for example.
However, the majority of production seems to remain in China. This is evidenced, among other things, by the steady growth of Apple's supply chains. Foxconn, for example, has expanded its operations from nineteen locations (2015) to an impressive 29 (2019), according to Reuters. Pegatron expanded the number of locations from eight to twelve. China's share of the market for specific materials needed to manufacture Apple devices grew from 44,9% to 47,6% over four years. However, Apple's manufacturing partners also invest in building branches outside of China. Foxconn has operations in Brazil and India, Wistron is also expanding into India. However, according to Reuters, the branches in Brazil and India are significantly smaller than their Chinese counterparts, and cannot reliably serve international demand - mainly due to high taxes and restrictions in both countries.
During the announcement of the company's financial results, Tim Cook said that from his point of view the majority of Apple products are manufactured "virtually everywhere", naming the United States, Japan, Korea and China. On the subject of costly exports from China, Cook also spoke several times with US President Donald Trump, who is a supporter of manufacturing in the United States. The reason why Apple continues to be dependent on China for production was revealed by Cook already in 2017 in an interview with the Fortune Global Forum. In it, he stated that the assumption of choosing China because of cheap labor is completely misguided. "China stopped being a country of cheap labor years ago," he said. "It's because of the skills," he added.
Source: Apple Insider
