By Asmita - Apr 20, 2025
Apple's deep interdependence with Chinese manufacturing for its iPhone production enables the company to leverage China's vast manufacturing ecosystem, despite the popular belief that it's solely about cheap labor. The roots of this relationship date back to the late 1990s, leading to unrivaled manufacturing advantages for Apple, with China now home to its critical supply chain. However, escalating US-China tensions and pressure to relocate manufacturing highlight the risks and complexities Apple faces due to its heavy reliance on China.
Apple logo via Goodfon
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Apple’s iconic label, “Designed in California, Assembled in China,” captures a deep interdependence between American innovation and Chinese manufacturing. While Apple’s design and engineering teams operate in the US, about 90% of its iPhones are produced in China, where most components are sourced, assembled, and then shipped worldwide, especially to the US, its biggest market. This setup has allowed Apple to sell over 220 million iPhones annually, leveraging China’s vast manufacturing ecosystem—a network so robust that Apple’s CEO Tim Cook once called it the most critical supply chain in the world.
The roots of Apple’s reliance on China stretch back to the late 1990s, when the company was struggling and China was opening up to foreign investment. Apple officially established a presence in China in 2001, partnering with Foxconn and other suppliers who could rapidly scale operations to meet Apple’s needs. China’s ability to provide a massive, skilled labor force and quickly adapt to engineering changes made it an unmatched location for high-volume, high-precision electronics manufacturing. Over time, Apple helped its Chinese suppliers evolve into world-class manufacturers, further entrenching its supply chain in the region.
Contrary to popular belief, Apple’s decision to manufacture in China is not primarily about cheap labor. Labor costs are a minor factor; the real advantages lie in supplier availability, manufacturing flexibility, and the capacity to ramp up production overnight. No US facility can match China’s scale or the concentration of skilled workers and engineers needed for Apple’s complex devices. The Shenzhen region, in particular, offers unparalleled access to suppliers and logistics, making it the global hub for electronics assembly.
However, this dependency is now a liability. Rising US-China tensions, escalating tariffs, and political pressure to “onshore” manufacturing have exposed Apple’s vulnerability. While Apple is exploring alternatives like India, its deep integration with China’s supply chain makes any rapid shift risky and complex, leaving the company stuck between two economic superpowers.
