South Korean media: "Not related to cost reduction", why can't Apple leave China?

On May 8, the South Korean economic daily "Korea Economic Daily" published an article stating that "designed by Apple in California and manufactured by people around the world." This is Apple's production policy. But despite the word "global," Apple still relies on China for more than 80% of its iPhone production.

With concerns about an Apple supply chain crisis triggered by the Trump administration's tough tariff policies growing, a video interview from 2017 with Apple CEO Tim Cook, explaining the background of Apple's reliance on China, has once again gained attention.

In a 2017 interview with Fortune, Apple CEO Tim Cook stated that "China has not been a low-wage country for several years," and emphasized that his choice of China was not solely for cost reduction.

Cook mentioned advanced technology and a large pool of technical talent. He explained: "Apple products require advanced tools. Chinese engineers are very skilled in this field." Implementing precise processing conditions for each product requires necessary expertise, and choosing China as a manufacturing base is because China excels in processing.

Cook added: "If you hold a mold engineer meeting in China, you can ensure enough personnel to fill several football stadiums, but in the U.S., you might not be able to fill a conference room."

Apple's severe reliance on China was also confirmed in a 2012 report by The New York Times. At that time, The New York Times analyzed China's advantages as: the ability to quickly mobilize thousands of workers in a short time, having a large number of highly skilled technicians, and possessing an intensive supply chain capable of both sourcing components and assembling them. The New York Times won a Pulitzer Prize for this report.

In fact, Apple began production of the "Mac Pro" at its Austin, Texas factory in 2013. As the only product produced in the U.S., it holds great symbolic significance, but encountered delays of several months during the initial production phase. The reason was simple. There was a shortage of screws. At that time, there were no factories in the U.S. capable of mass-producing small screws, so Apple had to delay production by importing screws from China. The New York Times commented on this event, saying, "A small screw reveals why the iPhone cannot be assembled in the U.S."

Therefore, countries like India and Brazil are becoming alternative solutions. Bloomberg reported that "Apple is very likely to move its production base from the U.S. to India." From April 2023 to March 2024, Apple assembled iPhones worth approximately $22 billion in India, a year-on-year increase of about 60%.

However, some experts remain cautious. Because moving the entire supply chain out of China is a daunting task. It is analyzed that due to Apple's dependence on China nearing 80%, even if 10% of the supply chain is moved to the U.S., it would take about $30 billion and over three years.

In fact, a 2022 report by the British Financial Times pointed out that "Tim Cook confidently said he has a global supply chain spread across 50 countries and regions, but ultimately all assembly and shipping go through China. India and Vietnam seem to be promising alternatives, but core components still come from China, and simply changing the assembly location is unlikely to alter the China-centered situation."

Original source: https://www.toutiao.com/article/1831543846566921/

Disclaimer: This article represents the author's personal views.