Despite coronavirus shutdowns, Apple cannot shake off dependence on China

Apple to delay iOS features to 2019
The audience assembles before the start of Apple's annual developer conference in San Jose, California, U.S. June 5, 2017 REUTERS/Stephen Lam/File Photo

There's no doubt that the ongoing coronavirus outbreak has impacted the lives of millions of people around the world, but the epidemic has also affected tech companies in the worst possible manner seen in years.

Not only has the deadly epidemic been the primary reason behind the cancellation and postponement of several tech events but it has also affected the supply chains of tech giants including that of Apple.

iPhone supply faces a crisis as a result of the intermittent shutdowns at Apple's manufacturing partner Foxconn's Chinese factories. It has put huge pressure on Apple to get enough iPhones, especially newer iPhone models such as the iPhone 11 in time to meet demand.

Apple's dependence on China

Since the Chinese factories are where most of the world's iPhones are manufactured, it seems like Apple cannot completely jettison its dependence on China, as the US tech giant might not be able to count on Foxconn's other factories based in Vietnam and India.

According to various reports citing Apple's supply chain sources, it will be hard for Apple to rely on Foxconn's Indian and Vietnamese factories to meet production demand, especially that of the newer iPhone models including the iPhone 11, 11 Pro and the iPhone 11 Pro Max.

Apple's internal executives had reportedly proposed a "transfer of assembly of at least one product to Vietnam" way back in 2015. However, the "transfer" may not be as easy as it seems and it will be very difficult to implement, although Apple gets some of its products assembled in Vietnam.

Apple's production facility in India

Apple also gets some of its older iPhone models such as the iPhone SE and iPhone 7 "assembled" at Foxconn's manufacturing facility in India. The company also has plans to produce the iPhone 11 in the country, and if that plan succeeds, the iPhone 11 will be one of the first new iPhone models to be manufactured outside of China.

But according to reports, the country cannot provide enough skilled workers for manufacturing iPhone displays. In addition to that, India is not well equipped in order to meet the robust infrastructure demands that Apple expects from manufacturers to make the newer iPhones. The Indian government levies a higher tax rate on products that are not manufactured in India. Since Foxconn only "assembles" the iPhone and not manufacture the components locally, Apple ends up needing to pay more in taxes. For these reasons, Apple has no other choice but to continue manufacturing the iPhone 11 in China.

Tim Cook has no plans to withdraw from China

Also, despite the continuing coronavirus situation in China that has claimed the lives of more than 3,000 people and affected Apple's supply chain, it seems unlikely that Apple has any plans to transfer its iPhone 11 production outside the country.

Apple CEO Tim Cook has said the company will not withdraw from China due to the production interruptions cause by the epidemic.

He said the ongoing epidemic is only "temporary" and that the Chinese government is handling the situation well. Foxconn too has been reassuring Apple that it will meet supply chain demands.

Foxconn reopens Chinese factory

Foxconn recently re-opened its production line in China and it has said that it is trying to make up for lost time. Many other companies that had previously shut down their factories and workplaces have also begun reopening them as the situation seems to ease in the country.

Related topics : Coronavirus