President Donald J. Trump shakes hands with Apple CEO Tim Cook following his tour of the assembly line at the Apple Manufacturing Plant Wednesday, Nov. 20, 2019, at Flextronics International LTD-Austin Product Introduction Center. (Official White House Photo by Shealah Craighead)
In his previous role as Chief Operating Officer, current Apple CEO Tim Cook tied the company’s fate to China by developing a complex supply chain within the country. Patrick McGee reports in the Financial Times:
Over the past decade and a half, Apple has been sending its top product designers and manufacturing design engineers to China, embedding them into suppliers’ facilities for months at a time.
These Apple employees have played integral roles co-designing new production processes, overseeing the minutiae of manufacturing until things were up and running, and keeping close tabs on suppliers to ensure compliance.
Apple has also spent billions of dollars on custom machinery to build its devices, developing niche expertise that its rivals did not even know about, let alone compete with.
It has transformed the company and the country. “All the tech competence China has now is not the product of Chinese tech leadership drawing in Apple,” O’Marah says. “It’s the product of Apple going in there and building the tech competence.”
These operations played such a salient role that the unassuming character behind them, chief operating officer Tim Cook, would succeed Steve Jobs as CEO in 2011. It was Cook who shifted Apple’s production from the US to China, where he established unparalleled efficiencies that underpinned Apple’s ascent.
But this extraordinary success story has also created Apple’s biggest vulnerability: its dependence on a single country, China, which under President Xi Jinping has grown increasingly authoritarian and estranged from the west.
The manufacturing concentration is glaring for a risk-averse company widely lauded for leading the world in supply chain brilliance. More than 95 per cent of iPhones, AirPods, Macs and iPads are made in China, where Apple also earns about a fifth of its revenue — $74bn last year. That contrasts with rivals such as Samsung, which have sharply cut back manufacturing in China.
Even in recent years, as competition between Washington and Beijing has escalated sharply, Apple has continued to invest in China and further cement its connections with the country.
The result is intense political scrutiny of Apple and its relationship with China, the country most in Washington consider to be America’s principal rival. Cook and his company are now under intense pressure from investors and US politicians to “decouple” from China and accelerate a diversification strategy that already has some products assembled in Vietnam and India.
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