Apple is slowly moving iPhone production out of China.
Apple's relationship with China is at its most critical moment since former President Donald Trump imposed tariffs on imports from China, according to Bloomberg analyst Mark Gurman. When the tariff rules take effect, American companies importing goods from China into the United States will be taxed, and American consumers will also be affected.
The standard iPhone 15 will be produced in China and India
High taxes put enormous pressure on Apple. According to Gurman, Apple is considering shifting more iPhone production to India, a market that produced 6.5 million iPhones last year and the company hopes to reach 10 million this year. Now.
In 2023, the standard iPhone 15 models will be produced simultaneously in China and India. The iPhone 15 Pro and iPhone 15 Ultra will only be assembled in China. Meanwhile, other "Bad Apple" products are being linked to production at factories outside of China. Vietnam, for example, is where AirPods are manufactured, while other production takes place in Malaysia and Ireland.
Apple executives are asking employees to travel outside China to source components and lay out production lines for new products due next year.
Even so, for now (and for years to come), Apple still needs to maintain its relationship with China. An estimated 20% of Apple's revenue comes from China, Taiwan and Hong Kong. Apple has 40 stores in China, where most iPhone models are still assembled.
Furthermore, the "Apple flaw" requires a clever strategy in reducing ties to China. Company executives worry that Chinese consumers will stop buying iPhones and other Apple products if production is quickly pulled out of China.
China is not the only country
In addition to China, Apple is also very keen to withdraw from Taiwan. As an inexperienced chip designer, Apple relies on TSMC, the world's leading foundry, to manufacture all of its chips.
Apple is gradually moving iPhone production out of China.
Starting next year, TSMC will start producing 4-nanometer chips at its Phoenix, Arizona, U.S. factory. They will be integrated for the iPhone 16 Pro and iPhone 16 Ultra.
However, a second chip factory is under construction in Phoenix and is expected to produce 3nm chips in 2026. Therefore, Apple will purchase chips from TSMC's manufacturing plant in the United States, reducing its dependence on TSMC's Taiwan factory.