Will Apple Ever Choose India Over China?
As the pandemic pushes the tech giant to diversify its supply chain, India is eager to take up the mantle
An interesting thought experiment emerged when Trump hastily banned TikTok in the United States and sent it on a hunt for an American buyer: What would happen if President Xi Jinping cited similar security reasons and forced Apple to sell its China operations?
Apple’s soaring share price would come crashing down, and its future would be thrown into disarray, because China is not just Apple’s largest revenue source after the United States and Europe; it’s also home to a huge portion of Apple’s supply chain. Lucky for Apple, Xi Jinping is unlikely to impose any such ban because of the extent to which the Chinese economy depends on this robust supply chain to sustain jobs and exports.
Apple’s relationship with China stretches all the way back to 2001, when Taiwanese electronics manufacturer Foxconn first started manufacturing iPods in China. Over time, China’s growing network of suppliers, infrastructure, low-cost manufacturing, and trained, cheap workforce made it inseparable from Apple’s production processes.
In 2017, concerned by its overdependence on China, Apple started shifting a small part of its production to Vietnam and India. However, the lion’s share of its products continued to be made in China, because there was no reason for Apple to disturb this relatively inexpensive, well-oiled supply chain. In addition to serving as the location for 90% of the factories that assemble Apple’s products, nearly 48% of Apple’s component suppliers for circuit boards, glass, chargers, cables, batteries, and more were concentrated in China as of 2019.
But when the U.S.-China trade war escalated under the Trump administration last year, Apple began facing the possibility of tariffs on its iPhones and MacBooks. Then the Covid-19 pandemic hit China, kneecapping Apple’s entire supply chain. Apple’s assemblers and component suppliers had to shut down their factories for months, resulting in a production delay and a shortage of Apple products around the world. For the first time in its history, Apple revised its financial guidelines, warning investors that it wouldn’t be able to meet its sales…