China Cracks Down on Hi-Tech Exports As It Fights to Block Apple’s Move to India
Credit: Mavas_bd / Shutterstock
Toggle Dark Mode
Apple is working to move some of its supply chain to India, causing the Chinese government a bit of consternation, as it tries to make it more difficult for Apple to expand its production in that country.
Apple has been working in recent years to lessen its dependence on China as a manufacturing center, moving production of some of its devices and accessories to India and other countries. Apple has made impressive progress in moving production to India, causing China to be concerned over the loss of investment and jobs for its citizens.
The Financial Times recently reported on the difficulties Apple experienced in moving to India. Apple is walking a tightrope due to the already tense political relationship between India and China and its desire not to anger the Chinese government.
China realizes the threat India poses to its dominance in the manufacturing of devices like Apple offers and has made moves to foil companies like Apple, who are looking to shift production to India.
In January, China began cracking down on the export of critical materials and high-tech equipment required to manufacture Apple’s devices and accessories.
The Financial Times report also noted that this has also affected Chinese citizens. China has blocked the movement of some Chinese technicians into India as it works to prevent needed knowledge and skills from exiting Chinese borders.
This means Apple’s supply chain is suffering, as China’s moves make it harder for the Cupertino firm to gear up Indian production to a level approaching that of China. China’s restrictions on materials and equipment mean its manufacturing partners, such as Foxconn, will need to find suppliers who meet Apple’s exacting requirements and are out of the reach of China’s interference.
Apple is also facing pressure from Beijing’s government, including a 2023 restriction on government employees using Apple devices. Apple has also faced several restrictions as it attempts to bring its Apple Intelligence AI features to the country, not the least of which is a requirement to find a Chinese tech partner for the project.
Luckily, India has done a lot to help Apple establish production in India, including funding from a Production-Linked Incentive program and relaxing restrictions to allow Apple to open its company-owned stores in the country.
India is also working with current Apple suppliers to help them get established in the country. India officials have made several visits to Taiwan to meet with firms like Foxconn and Wistron to bring their production to the country. India is expected to account for over 20% of the global iPhone production in 2025.
Apple is not focusing solely on India; it has also expanded production to other countries, such as Vietnam. The company is looking to mitigate risk by not relying on a single country for its device production, having learned its lesson by relying heavily on China for so many years.
The COVID-19 pandemic contributed to Apple’s decision to diversify its supply chain, as it faced supply chain issues during the pandemic, as Chinese production lines were shut down for long periods due to China’s stringent policies during the COVID outbreak.
Apple has also been forced to deal with geopolitical tensions between China and the United States. Newly-minted US President Donald Trump has promised blanket tariffs on Chinese imports. Diversification of production will help Apple avoid the tariffs when bringing iPhones into the US.
India has already offered ways to help Apple with tariffs, promising to cut import taxes for Apple and other companies that make devices, accessories, and components in the country.
