China has been one of the biggest Apple suppliers, second only to Taiwan. However due to some recent clash with the Trump Administration’s new tariff rules some tension has developed over Apple’s dependency on China for the manufacturing of their products.
According to a new report, Apple is being forced by the White House to reduce its dependency on China and Taiwan, and on top of that Apple has already been planning on shifting its assembly plants in countries like Vietnam, Thailand, and India. Which is being assisted by government incentives.
It was a hot summer morning in Taipei when several officials from the American Institute in Taiwan, the de facto U.S. embassy, visited the top management of a major tech company, a key supplier to Apple.
It was immediately apparent that this was unlike previous courtesy visits, where U.S. officials stop in from time to time to hear what’s happening in the industry. This time, they cut the chitchat and threw out a blunt question soon after they sat down: ‘Why aren’t you moving more of your production capacity outside of China?’ they asked. ‘Why aren’t you moving faster?’
Participants described the conversation as ‘serious and unsettling’ [and] appeared to be an effort to draw those companies over to the US side in the escalating Washington-Beijing tech war, multiple sources with knowledge told Nikkei Asia.
This has just escalated the whole US-China trade war, which can benefit countries like India, Thailand, etc. and even the companies like Apple and others who rely on China for its supplies, due to the support of the neighboring countries offering their full support and incentives to create new job opportunities.
What started as US government pressure on American companies to boycott specific Chinese entities has since become a concerted effort to force non-US suppliers to join a wholesale blockade of Chinese technology.
‘Washington has weaponized tech supply chains, for example, in semiconductors, in order to slow down China’s technology ambitions,’ said Alex Capri, a research fellow at the Singapore-based Hinrich Foundation and visiting senior fellow of National University of Singapore Business School. The US is aiming to ‘suppress Beijing’s techno-authoritarianism model,’ he said.
The message, as understood by the Taiwanese executives, was urgent: Move production facilities out of China, reduce ties with Chinese clients like Huawei and stand with the US, or face the potential worst-case scenario of becoming Washington’s next target.
Ever since the “Boycott China” movement has picked up, the tension between the major companies and its china-based suppliers, have dramatically increased. Since China has always had a monopoly on almost all the manufacturing processes of almost all major companies, it gave them such a huge advantage over everyone else, that every other manufacturer is also trying to reduce its dependency on China.