Apple is facing tougher export checks by Chinese authorities as part of a claimed crack-down on technology with potential military applications.
While the increased scrutiny is said to be for security reasons, many believe the real reasons are both economic and political …
Apple’s attempts to reduce its dependence on China
The need for Apple to lessen its dependence on China as a manufacturing center has been clear for many years, and the company has been gradually growing production in India, Vietnam, and elsewhere.
Apple has long targeted India as its primary second manufacturing home, with ambitious-sounding reports that a quarter of all iPhones could be made in India by 2025, and that this could rise to half of all iPhones by 2027.
Progress has so far been relatively slow, but a new milestone was reached last year when production of the iPhone 16 began in India just weeks after launch – the first time a flagship phone has been mader in India so early in the lifecycle. It’s believed Apple is aiming for iPhone 17 production to begin simultaneously in China and India.
Claimed crackdown on military tech
Because so many iPhone components are manufactured in China, Apple needs to export these parts to India and elsewhere. Nikkei reports that these exports have been slowed by the implementation of a new law introduced by China last month.
China is increasing its scrutiny of exports by Apple and other American tech companies, hampering their efforts to expand production in Southeast Asia and India, according to multiple people familiar with the matter.
The tighter customs checks are related to dual-use technology export controls Beijing introduced in early December and have resulted in delays of days or even weeks on shipments of production equipment and materials to Vietnam and India.
The term “dual-use” refers to technology the Chinese government claims could have both civilian and military uses.
Likely economically and politically motivated
The reality is that the measures were motivated by economics and politics.
Economics because China obviously wants to make it as difficult as possible for Apple to shift manufacturing capacity out of the country. Politics because president-elect Trump has threatened to impose an additional 10% tariff on all Chinese goods imported into the US, and China wants to highlight its potential for retaliatory action.
That threat has already seen other US tech giants like Dell and Microsoft to accelerate their own efforts to diversify production out of China.
“From my observation, Trump’s threats of a tariff war and the deterioration of the Chinese economy are the main drivers behind the increasing Chinese customs checks,” tech supply chain analyst Chiu Shih-fang told Nikkei Asia.
One source said that even components not on the dual-use list are being affected.
“What bothers us more is that some items and tools are not even on the dual-use list but are also facing stricter reviews at the customs just because they have similar HS codes,” said a person at another American company with knowledge of the situation. “Even some speed testing equipment for smartphones, they [Chinese customs] can argue it could be related to military use.”
The report lists examples of other materials and equipment affected by the checks.
Photo by National Cancer Institute on Unsplash
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