This is what the Apple disciples have been waiting for everywhere: the new iPhone generation is here, the 14th by their own counting. Cell phones with the bitten apple logo stand for technological progress in your pocket like nothing else. But they also stand for the economic ties between the USA and China. “Designed in California, Made in China”, that’s what the leaflet says. But the Chinese share of iPhones has grown with each generation. This is a thorn in the side of the US government.
Wore China one Japanese study according to 3.6 percent of the value of mobile phones in 2009, it was already more than a quarter in 2018. Initially, China only contributed cheap labor to assemble parts imported from the United States, Korea, or Japan. Chinese companies are now supplying core components such as sensors, cameras and batteries. The iPhone thus symbolizes China’s rise from the world’s workbench to a global development center driven by Chinese ruler Xi Jinping. Only on Tuesday did he call on his officials to further strengthen the “dominant position” of Chinese companies in innovation.
But the US government of President Joe Biden is trying to slow down Xi as best he can. Most recently, she issued export bans on advanced computer chips to China. It puts pressure on friendly governments such as the Netherlands and Germany in order to withhold the Chinese from important production machines for chip production. And hidden in a new multi-billion dollar US semiconductor manufacturing subsidy package is a ban on cutting-edge chip manufacturing in China. So it seems like a success story for Biden that Apple also wants to have its iPhone 14 produced in India. The preparations for this are in full swing. After all, India is a democracy and Beijing is not on good terms either.
But Washington shouldn’t celebrate too soon. Because the production in India will take place to a large extent with Chinese partners, such as among others Bloomberg and New York Times to report. The devices are to be assembled by the Taiwanese Foxconn group, which also operates the iPhone factories in China. The Chinese suppliers Lingyi iTech and BYD want to produce components in India, but many other components are to be imported directly from China. After all, more than half of Apple’s 200 most important suppliers are in China.
And the reasons for the move probably have less to do with Biden’s pressure and more to do with the fact that Chinese workers’ wages are now too high. Xi’s strict zero-Covid policy with its lockdowns also leads to sensitive production losses and supply chain chaos. That cost Apple billions. A production site outside the national borders makes business sense. But the new location will not replace China in the foreseeable future. According to reports, around one million iPhones were produced in India in the first quarter. Apple has sold 56 million units worldwide. At that distance, decoupling from China may still take a long time.