Apple’s Tech Supply Chain Shows Difficulty of Dumping China

American companies have had a growing list of reasons to downgrade their ties with China in recent years. Former President Donald Trump’s tariffs. Beijing’s stringent Covid lockdowns. The US-Sino standoff over Taiwan. Political pressure to “friend-shore” supply chains toward nations aligned with Washington.

But breaking up, as the adage goes, is hard to do.

That conclusion is evident from a Bloomberg Intelligence analysis of Apple Inc., which is trying to reduce its dependence on China. The Cupertino, California-based company already started producing some iPhone 14 models in India, in an earlier than usual move for new models. And Apple’s largest supplier, Foxconn Technology Group, recently agreed to a $300 million expansion of its production facilities in Vietnam.

Read BI’s Report: Untangling US-China Technology Supply Chain Hard, Not Impossible

But Bloomberg Intelligence estimates it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones have been made. Scores of local component suppliers -- not to mention modern and efficient transport, communication and electricity supplies -- make it particularly difficult to get out of the world’s second-largest economy.

“With China accounting for 70% of global smartphone manufacturing and leading Chinese vendors accounting for nearly half of global shipments, the region has a well-developed supply chain, which will be tough to replicate -- and one Apple could lose access to if it moves,” BI’s report from analysts Steven Tseng and Woo Jin Ho said.

An Apple spokesperson did not respond to a request for comment.