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As tariffs loom Apple remains dependent on China

Video Credit: Reuters Studio - Duration: 01:59s - Published
As tariffs loom Apple remains dependent on China

As tariffs loom Apple remains dependent on China

Tapping factories in Brazil and India has not lessened Apple's dependence on China, the company's supply chain data shows, raising the stakes for the iPhone maker as U.S. President Donald Trump wages a trade war and promises more tariffs.

Stephen Nellis reports.

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Designed by Apple in California assembled in China and tariffed by Trump.

I'm Stephen Nellis with Reuters in San Francisco.

Apple is one of the world's biggest companies.

But on September 1st it could face a tariff of up to 15 percent on some products like air pods and the Apple Watch.

And then starting December 15th it could face a tariff on the iPhone, its biggest selling product.

All of these products as of now are made in China.

We analyzed five years worth of Apple supply chain data that included the locations of more than 750 suppliers each year between 2015 and 2019.

What we found is that Apple's dependence on China for its supply chain has actually increased over that time.

About 45 percent of its suppliers were in China as of 2015.

Fast forward to 2019 and almost forty eight percent of those suppliers are in China.

Now Apple says that most of the value of its iPhone actually resides in the United States because that's where the design happens.

That's where the software is made, and that's where many of its suppliers like 3M, Intel, or Qualcomm actually have their corporate headquarters.

However the devices are assembled in China for a good reason.

Few other countries on earth have enough people to put together as many products as Apple sells.

Apple builds hundreds of millions of devices a year.

They only hold a few days of inventory at a time.

And even though the company has expanded with some locations in Brazil and in India to deal with local tariffs in those countries, locations like that are unlikely to ever produce the kind of volumes that Apple needs to meet its global demand.

Apple hasn't said what it plans to do if those tariffs do take effect although it's told government regulators that it believes that tariffs overall will raise prices for U.S. consumers.

But for now it doesn't look like Apple's production is going anywhere outside of China.




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