Apple's Dependence on China: A $300 Billion Problem
Apple has long relied on China for its manufacturing operations, with the slogan "Designed by Apple in California. Assembled in China" adorning its iPhones for years. However, this relationship is now undergoing a gradual shift.
Apple recently removed the "Assembled in China" phrase from its iPhones and updated it to "Made by people everywhere." This reflects the company's efforts to diversify its supply chain away from China.
Data reveals that China remains Apple's largest source of suppliers, but its share has been declining. In 2022, 33.6% of Apple's suppliers were located in China, down from 36.4% in 2021.
Apple is increasingly relying on supply chains in other countries such as Vietnam, Taiwan, and South Korea.
While China remains the primary location for assembling Apple products, the company plans to increase production in India. Last year, it began manufacturing iPhones in both India and China from launch day.
Apple's move is not isolated. Extended COVID-19 lockdowns and political pressure in China have prompted manufacturers to seek alternative locations.
The shift is not limited to manufacturing. Apple is also facing concerns about its business in China. It lost its market leadership position in smartphone sales in the first quarter of 2024, falling behind Vivo and Honor. Its share of the Chinese smartphone market declined to 15.7%, the lowest since 2020.
Apple's financial performance in China has been affected, with analysts forecasting a decline in sales of 11% year-on-year for the quarter ending in March 2024.
Concerns about Apple's presence in China have led to a decline in its share price, wiping out over $300 billion in market value.
Additional challenges include increasing online regulation in China and the potential for retaliation in response to the US ban on TikTok.
Despite the pressures, Apple continues to emphasize the importance of its relationship with China. CEO Tim Cook has stated that "There's no supply chain in the world that's more critical to us than China."
However, Apple is gradually