WSJ Examines Apple's Reliance on China Amid Coronavirus Outbreak

Apple's Mac event is happening now! Follow our Live Coverage.

Production on Apple's devices has been stymied in recent weeks due to delays caused by the coronavirus outbreak in China. Many of Apple's China-based suppliers had to shut down for two weeks or more in February, and there are still staffing issues as factories work to ramp up production around travel bans, quarantines, and other problems.

chinafoxconn
Amid the China coronavirus outbreak, which has caused Apple to announce that it won't make its March quarter revenue goals, The Wall Street Journal has taken a look at Apple's reliance on China and why Apple is likely to continue to be dependent on China for the foreseeable future.

Apple's operations team has been raising concerns about the company's reliance on China, and as early as 2015, there were suggestions that Apple relocate assembly of one or more products to Vietnam, allowing Apple to start training workers and creating component providers outside of China.

Senior managers shot down the idea at the time, and transitioning away from China has been "too challenging to undertake." Apple has, however, begun to move some production outside of China. Apple has moved AirPods Pro assembly to Vietnam due to tariffs, and now produces some iPhones in India, but a complete break "is impossible."

As The Wall Street Journal points out, Apple CEO Tim Cook has been downplaying the need for changes in the supply chain. On Friday, Cook said in an interview that if there are supply chain changes because of the coronavirus, it will be "adjusting some knobs, not some kind of wholesale fundamental change."

Apple is not able to break away from China because China has hundreds of thousands of employees, both skilled and unskilled, that have expertise in manufacturing Apple's devices.

Finding a comparable amount of unskilled and skilled labor is impossible, said Dan Panzica, a former Foxconn executive. The population in China has allowed suppliers to build factories with a capacity for more than 250,000 people. The number of migrant workers in China, who do much of Apple's production, exceed Vietnam's total population of 100 million. India is the closest comparison, but its roads, ports and infrastructure lag far behind those in China.

"You're not going to be able to have mega-factories anywhere else," Mr. Panzica said. "You're going to have to break them up."

Should Apple decide to move production out of China, that could impact device sales in the country. China is responsible for close to a fifth of Apple's total revenue.

Apple's relationship with China began many years ago, when Foxconn began making iPods in 2001 and the iPhone in 2007. As Apple device sales have grown, the factories that assemble Apple devices have also grown in tandem, resulting in what The Wall Street Journal describes as a "triangle of interdependency."

Apple grew to depend on Foxconn to make devices and Chinese consumers to buy them. Foxconn built its business by leaning on China's vast workforce and control over land to construct factories. And China became beholden to Foxconn as the nation's largest private-sector employer and Apple as a trainer of new technology suppliers.

Apple did plan to assemble some iPhone 11 models in India, but the effort was halted before a single manufacturing line was set up, as Apple believed India was not ready to supply the skilled labor or robust infrastructure that Apple expects. ‌iPhone 11‌ models were produced in China instead.

That's not likely to change in 2020 because there's no supply chain in place and workers in India aren't ready to produce the high-end iPhones that are expected to be released in 2020. As for U.S. production, Apple is manufacturing some Mac Pro models in the United States (those sold in the United States), but ‌Mac Pro‌ models sold in the rest of the world are still manufactured in China because the U.S. also doesn't have the skilled labor force that China has available.

The Wall Street Journal's full report on Apple's dependence on China can be read on The Wall Street Journal website.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Top Rated Comments

gugy Avatar
21 months ago
Not only Apple but almost all large corporations rely on China. The Chinese got the USA by the balls.
Score: 16 Votes (Like | Disagree)
jjs_nv Avatar
21 months ago
I got a crazy idea. Bring home the troops. Call it a national security emergency. Invest the roughly $1 Trillion per year saved building infrastructure, investing in supply chain and other savings to rebuild our intellectual capital and stop policing the world. Maybe, I don't know, start reinvesting in semiconductor fabs, like the Chionese, South Korean and Taiwan governments all do.

We have a choice, police the world and fail, or invest in our people and succeed.
Score: 15 Votes (Like | Disagree)
hagjohn Avatar
21 months ago

Senior managers shot down the idea at the time, and transitioning away from China has been "too challenging to undertake." Apple has, however, begun to move some production outside of China. Apple has moved AirPods Pro assembly to Vietnam due to tariffs, and now produces some iPhones in India, but a complete break "is impossible."
? on it being impossible... Anything can be moved. You just need to invest in it.
Score: 14 Votes (Like | Disagree)
calzon65 Avatar
21 months ago
Not saying Apple should make a complete break from China, but they better use this as a wake-up call to reevaluate their production supply chain and manufacturing plan.
Score: 10 Votes (Like | Disagree)
JPack Avatar
21 months ago
As the manufacturing engine of the world, China also makes the upstream materials used in the manufacturing of products.

If you're manufacturing an LCD, you need the chemical substrates, glass, optical films, and backlight modules, all of which come from China. The idea that you can separate it and suddenly manufacture in India or the U.S. is just silly.

Tim Cook has talked about the skills available in China. This is exactly what he's referring to. Workers in other countries don't suddenly gain the skills to make and research the above mentioned items. It requires decades of government investment and focus on education.
Score: 9 Votes (Like | Disagree)
simonmet Avatar
21 months ago
No comment on Apple being named as a company using forced labour from the persecuted Uyghur minority, who’ve been sent to “reeducation” and indoctrination camps that look more like detention centres or prisons (with guard towers and barbed-wire fencing); brainwashed; and then deported from their homelands in Western China to work in Western factories?

"The Uyghurs had to come because they didn't have an option. The government sent them here," a local businessperson told the [Washington] Post.

"Chinese factories and Chinese media think it's a positive thing that these Uyghurs are being moved away and are working under semi-military conditions and management". China is one of only a handful of countries that have not ratified the International Labour Organisation's Forced Labour Convention (Australian Broadcasting Corp).

Nike has been particularly implicated.

https://www.abc.net.au/news/2020-03-02/aspi-uyghur-china-forced-labour-report/12017650
https://www.bbc.com/news/world-asia-china-51697800
https://www.washingtonpost.com/world/asia_pacific/china-compels-uighurs-to-work-in-shoe-factory-that-supplies-nike/2020/02/28/ebddf5f4-57b2-11ea-8efd-0f904bdd8057_story.html

Tim Cook naturally came out to defend their hiring practices, working conditions and suppliers, but if this is true (as seems likely) it’s a very bad stain on Apple’a Chinese manufacturing addiction.

The report claims it's the biggest persecution based on religion since the Holocaust, and that the aim is to ethnically "cleanse" the far-Western province.
Score: 9 Votes (Like | Disagree)

Related Stories

studio buds family

Beats Studio Buds Debuting Today With Active Noise Cancellation, Stemless Design, and More for $150

Monday June 14, 2021 8:00 am PDT by
We've seen a lot of teasers about the Beats Studio Buds over the past month since they first showed up in Apple's beta software updates, and today they're finally official. The Beats Studio Buds are available to order today in red, white, and black ahead of a June 24 ship date, and they're priced at $149.99. The Studio Buds are the first Beats-branded earbuds to truly compete with AirPods...
YouTube Picture in Picture Feature

YouTube Premium Subscribers Can Now Use iOS Picture-in-Picture: Here's How

Wednesday August 25, 2021 3:55 am PDT by
Google has rolled out picture-in-picture support as an "experimental" feature for YouTube premium subscribers, allowing them to watch video in a small window when the app is closed. If you're a premium YouTube subscriber looking to try out picture-in-picture, follow these steps: Launch a web browser and sign into your YouTube account at YouTube.com. Navigate to www.youtube.com/new. Scroll...
M1X MBP Feature

Leaker: Upcoming MacBook Pro to See Price Hike Over Current Model, Equal Performance Across 14 and 16-Inch Sizes

Tuesday August 24, 2021 5:28 am PDT by
The upcoming 14-inch MacBook Pro is set to be more expensive than the current 13-inch MacBook Pro and both the 14 and 16-inch models will offer the same performance, according to the leaker known as "Dylandkt." The leaker shared the information on Twitter, explaining that both of the upcoming MacBook Pro models, expected to come in 14 and 16-inch sizes, will feature the same performance due...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
ryanscoolios13thumbnail

Apple Releases iOS 13.1.3 With Bug Fixes for Phone, Mail, Health, and More

Tuesday October 15, 2019 10:09 am PDT by
Apple today released iOS 13.1.3 and iPadOS 13.1.3, minor updates to the iOS 13.1.2 software that was released two weeks ago. This is the fourth update to the iOS 13 operating system that came out in September. The iOS and iPadOS 13.1.3 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings > General > Software Update....
Top Stories 75 Thumbnail

Top Stories: Last-Minute iPhone 13 Rumors, Apple Announces App Store Changes, and More

Saturday September 4, 2021 6:00 am PDT by
The finish line is in sight! Apple's annual iPhone event is likely just a week or so away and all eyes will be on the company as it unveils the next version of its most popular product line. With any luck, we'll also see the next-generation Apple Watch and perhaps even some new AirPods. Other news this week saw Apple making some more changes to its App Store policies in response to a...
affinity designer contour tool

Serif Updates Affinity Photo, Designer, and Publisher With New Tools and Functions

Thursday February 4, 2021 1:58 am PST by
Serif today announced across-the-board updates for its popular suite of Affinity creative apps, including Affinity Photo, Affinity Designer, and the Apple award-winning Affinity Publisher for Mac, all of which were among the first professional creative suites to be optimized for Apple's new M1 chip. "After another year which saw record numbers of people switching to Affinity, it's exciting to...
iPhone 13 Dummy Thumbnail 2

Kuo: iPhone 13 to Feature LEO Satellite Communications to Make Calls and Texts Without Cellular Coverage

Sunday August 29, 2021 7:39 am PDT by
The iPhone 13 will feature low earth orbit (LEO) satellite communication connectivity to allow users to make calls and send messages in areas without 4G or 5G coverage, according to the reliable analyst Ming-Chi Kuo. In a note to investors, seen by MacRumors, Kuo explained that the iPhone 13 lineup will feature hardware that is able to connect to LEO satellites. If enabled with the relevant...
maxresdefault

Craig Federighi and Greg Joswiak Discuss iPadOS 15, macOS Monterey, Privacy, Shortcuts on Mac, and More

Saturday June 12, 2021 6:12 am PDT by
As is tradition, Apple executives Craig Federighi and Greg Joswiak joined Daring Fireball's John Gruber in an episode of The Talk Show to discuss several announcements that Apple made over this weeks WWDC, including iPadOS 15, macOS Monterey, and a large focus around privacy. Federighi kicks off the conversation discussing the common architecture, now thanks to Apple silicon, across all of...
iOS 14 on iPhone feature emergency

Apple Seeds Third Betas of iOS and iPadOS 14.6 to Developers [Update: Public Beta Available]

Monday May 10, 2021 10:13 am PDT by
Apple today seeded the third betas of new iOS and iPadOS 14.6 updates to developers for testing purposes, one week after seeding the second iOS and iPadOS 14.6 updates. iOS and iPadOS 14.6 can be downloaded through the Apple Developer Center or over the air after the proper profile has been installed on an iPhone or iPad. iOS and iPadOS 14.6 appear to be more minor changes focusing on...