Apple is accelerating plans to relocate more of its iPhone production out of China after violent protests swept Zhengzhou (also known as “iPhone City”) last month, per The Wall Street Journal.
Why it matters: Among big Western companies, Apple stands out for its close links with China’s government and level of dependence on the country as a manufacturing hub—its decision to move operations out of the country is an indicator of weakness in China’s economy.
- The Foxconn factory in Zhengzhou makes most of the iPhones Apple sells and employs over 300,000 people.
- Workers at the site clashed with police in protests over wages, working conditions, and zero-COVID lockdowns that have kept employees on-site for weeks at a time.
Why it’s happening: Manufacturing in China has become riskier because of disruptions caused by zero-COVID lockdowns, and the recent wave of protests in the country has worsened the risk of disruption.
- That’s led to shoppers facing some of the longest wait times for Apple products ever recorded, just as the Christmas shopping season gets into full swing.
- Mounting tensions between Western governments and the US add even more risk for businesses that could suffer collateral damage if new tariffs or other economic measures break their supply chains.
What’s next: Apple’s aim is to eventually ship 45% of its iPhones from India and move more of its production of laptops, iPads, and other accessories to Vietnam.
- But for now, Apple is still heavily-dependent on China—neither India nor Vietnam can offer the same combination of high-end manufacturing ability and a massive labour pool.