Apple is experiencing heightened export inspections by Chinese officials amidst a proclaimed crackdown on technologies that may have military applications.
While officials claim these enhanced checks are for security purposes, many suspect that economic and political factors are the actual driving forces…
Apple’s efforts to diminish reliance on China
Over the past several years, Apple has recognized the necessity to reduce its reliance on China as a manufacturing hub and has been gradually shifting production to locations like India, Vietnam, and beyond.
India has long been identified as Apple’s primary secondary manufacturing base, with ambitious projections suggesting that by 2025, up to a quarter of all iPhones could be produced there, potentially rising to 50% by 2027.
Although progress has been somewhat slow, a significant milestone was achieved last year with the production of the iPhone 16 commencing in India just weeks post-launch—marking the earliest production of a flagship phone in India during its lifecycle. It is anticipated that production for the iPhone 17 will begin concurrently in both China and India.
Alleged crackdown on military technology
As a substantial portion of iPhone components is manufactured in China, Apple requires the export of these parts to India and other locations. Nikkei reports that these exports are facing delays due to a new law implemented by China last month.
China is tightening its scrutiny of exports by Apple and others in the American tech sector, obstructing their attempts to ramp up production in Southeast Asia and India, according to multiple sources familiar with the situation.
The stricter customs enforcement is linked to the dual-use technology export regulations introduced by Beijing in early December, resulting in shipment delays of several days or even weeks for production equipment and materials destined for Vietnam and India.
The term “dual-use” pertains to technologies identified by the Chinese government that might serve both civilian and military functions.
Possibly driven by economic and political factors
The reality is that these measures seem to arise from economic and political motivations.
Economically, China clearly aims to complicate Apple’s efforts to relocate manufacturing outside its borders. Politically, with President-elect Trump threatening a 10% tariff on all imports from China to the US, China is keen to illustrate its capacity for retaliatory measures.
This looming threat has prompted many US tech firms, including Dell and Microsoft, to expedite their own initiatives to diversify production away from China.
“In my view, Trump’s threats of a tariff battle and the worsening state of the Chinese economy are the primary reasons for the surge in Chinese customs inspections,” stated tech supply chain analyst Chiu Shih-fang to Nikkei Asia.
One insider commented that even components not listed on the dual-use inventory are facing scrutiny.
“What concerns us more is that some items and tools not included in the dual-use category are still encountering stricter customs reviews simply because they share similar HS codes,” explained a representative of another American company familiar with the situation. “Even certain speed testing equipment for smartphones can be argued by [Chinese customs] to have military applications.”
The report details various materials and equipment impacted by the increased checks.
Photo by National Cancer Institute on Unsplash
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