'It's becoming a huge problem': Apple is too reliant on China, warn analysts
- Apple is working to diversify its production base as over 85% of iPhones are currently assembled in China.
- China's labor costs are becoming increasingly high and Foxconn's recent issues in China have highlighted the challenges of relying heavily on the country for production.
- An ex-Microsoft executive claims that it will be difficult for Apple to replicate its Chinese factories elsewhere as the infrastructure and supply chain in other countries are not yet developed enough.
- Apple's relationship with China has been described as "untenable" as the company faces criticism from senators on both sides of the political aisle, but it is believed that it will take more than 20 years for Apple to completely unravel its relationship with China.
- India is seen as Apple's main hope for relocating production outside of China.
Over the past few months, there have been reports that Apple is working to diversify its production base. Currently, over 85% of iPhones are assembled in China. However, the recent issues at Foxconn's largest factory in China have highlighted the challenges of relying heavily on the country for production. Additionally, China's labor costs are becoming increasingly high. As a result, there have been claims that Apple is the most China-dependent brand in the tech industry.
Data shows that Apple directly employs 14,000 employees in China and most of the 1.5 million staff in its global supply chain are also in China. Despite efforts by Apple's partners, such as Foxconn, to boost production in Vietnam and India, many experts believe that these countries are not yet competitive enough to fully replace China as a production center.
An ex-Microsoft executive claims that it will be difficult for Apple to replicate its Chinese factories elsewhere. The infrastructure and supply chain in other countries are not yet developed enough to support Apple's production needs. Additionally, when Apple CEO Cook visited Luxshare Precision in 2017, some workers directly asked whether they wanted to relocate, but they got a negative answer.
In recent news, more than a dozen key Apple suppliers were granted permission to expand their work in India, which is seen as Apple's main hope for relocating production outside of China. However, this move only serves to underline the company's dependence on China. The pandemic has highlighted the risks of having most of Apple's manufacturing in one country and India is seen as a potential solution to this problem. However, it is estimated that it will take at least a couple of decades for Apple to fully move its production out of China.
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