By Li Panpan

Apple’s wide exposure to Chinese manufacturing, notable both for its low costs and rising risks, has receded since the pandemic began, reported Reuters on November 30.

Apple's supply chain data shows China's prominence in the company's global manufacturing is declining: In the five years to 2019, China was the primary location of 44% to 47% of its suppliers' production sites, but that fell to 41% in 2020, and 36% in 2021.

The data shows how a diversification drive by Apple and its suppliers, with investments in India and Vietnam and increased procurement from the Taiwan region, the US, and elsewhere, is reshaping the global supply structure, although analysts and academics say it will remain heavily exposed to China for many years to come, said the Reuters report.

"The China supply chain is not going to evaporate overnight," said Eli Friedman, an associate professor at Cornell University who studies labor in China.

"Decoupling is just not realistic for these companies for the time being," he said, although he expected diversification to accelerate.

The concentration of suppliers in China, the site of most production by Foxconn, which accounts for 70% of iPhones made globally, has been a key feature for Apple, the world's most profitable smartphone vendor, said Reuters.

But the strategy is shifting, driven not just by China's pandemic-related lockdowns and restrictions, but by rising trade and geopolitical tensions between Beijing and Washington that pose potential long-term risks.

Foxconn is stepping up its expansion in India, with a plan to quadruple the workforce at its iPhone factory over two years.

J.P.Morgan expects Apple to move about 5% of iPhone 14 production to India from late this year and to make one in four iPhones in India by 2025 and estimates that about 25% of all Apple products, including Mac PCs, iPads, Apple Watches and AirPods, will be manufactured outside China by 2025 versus 5% now.

The US rose the most to 10.7% in 2021 from 7.2% in 2019, followed by the Taiwan region, with an increase to 9.5% from 6.7%. India was still a relatively minor presence, rising to 1.5% from less than 1%, while Vietnam expanded to 3.7% from 2.2%, according to the Reuters report.

"Vietnam and India are not China. They can't produce at that scale, at the quality and with the turnaround time, with the reliability of infrastructure," said Cornell University's Friedman.