Apple Sauced and the Ripening of New Pathways

Apple has been a great success story in no small part because of China.  China has been a huge market for United States (US) based smartphone giant (one of its largest markets along with the US), a key cog in its massive global supply chain, and a source of technology innovation, at least in the software area.[1]  It would not be an exaggeration to assert that Apple has reaped tens of billions of dollars from its relationship with China.  Recognizing this, Apple CEO Tim Cook and other top executives have visited China numerous times, touting all things China like its market, impressive supply chains, and research and development capabilities.[2]  The firm has committed substantial time and financial resources to corporate citizenship endeavors in China such as renewable energy and forestry management as well as training programs for workers and suppliers.[3]  It also has expanded collaboration with Chinese suppliers in smart manufacturing and green energy, funded education initiatives at Chinese universities such as Zhejiang University, and built major research and development (R&D) facilities in places like Shenzhen.[4]

Apple has experienced a rude awakening from its dream-like China relationship following the outbreak of the Covid-19 pandemic which affected production, shipping, and sales, the escalation of US-China economic and political frictions, and Donald Trump’s stints in the White House and, commensurate with it, his war against imports.[5]  Rising US-China tensions have led President Trump (both the 1.0 and 2.0 versions), members of his administrations and Congress, and others to question Apple’s extensive presence in China, its support for free speech, human, and labor rights, and its empowerment of China’s tech sector and the Chinese Communist Party.[6]  In this heated environment Apple has been confronting Chinese government aloofness or unfriendliness as well as reduced appeal among Chinese electronics consumers, though the latter can be exaggerated.[7]  As for the government, it has banned the use of iPhones in government ministries, threatened an investigation of Apple App Store charges and policies, and refused to let the tech behemoth put Apple Intelligence on its smartphones in China.[8]

Trump has taken a relatively harsh stance towards Apple in recent times, particularly in regards to the Cupertino firm’s plan to build up a substantial iPhone manufacturing capability in India.  During a press briefing in mid-May, he remarked:

I had a little problem with Tim Cook yesterday…I said to him, ‘my friend, I treated you very good.  You’re coming here with $500 billion, but now I hear you’re building all over India…I don’t want you building in India…we treated you really good, we put up with all the plants that you build in China for years, now you got build us.  We’re not interested in you building in India, India can take care of themselves…we want you to build here.[9]

Less than two months later, Trump trade advisor Peter Navarro criticized Apple during an interview on CNBC, stating “‘With all these new advanced manufacturing techniques and the way things are moving with AI and things like that, it’s inconceivable to me that Tim Cook could not produce his iPhones elsewhere around the world and in this country.’”[10]

To manage the evolving situation in China, the U.S., and elsewhere, Apple has moved along multiple tracks.  One has been to bolster various production activities outside China in countries such as India, Indonesia, and Vietnam.[11]  Another has been to expand its universe of component suppliers both inside and outside China.[12]  Yet another has been political.  Apple has long courted Trump through symbolic as well as substantive gestures.  To illustrate, Cook gave Trump an almost $6,000 computer during his first term in office, dined with Trump in December 2024 prior to his return to the White House, has called him multiple times, and has undertaken to flatter him on social media.[13]  More eye catchingly, perhaps, in February this year, Apple pledged to invest $500 billion on expanding its US operations (server production, data center, training) and partnerships with firms making cover glass, semiconductors, and more over the next four years, allegedly creating 20,000 jobs in the process.  In early August, Apple announced at a White House event that it would make an extra $100 billion investment on top of its $500 billion February promise, most interpreting it as a gesture to obtain an exemption from Trump’s massive escalation of tariffs on semiconductors.[14]

Apple appears quite adept at navigating the stormy seas it has faced in recent years.  It might be content to rest on its laurels.  After all, it recently reportedly its largest quarterly revenue growth in 3-1/2 years, enjoyed double-digit iPhone sales growth year-over-year, and topped Wall Street profit and revenue expectations.[15]  The situation in China also has become brighter with Apple recording sales growth for the first time since the second quarter of 2023, partly benefitting from its inclusion in government subsidy programs.  Passivity would be a mistake, however, despite the daunting obstacles to establishing operations outside China as well as time and costs involved in transforming the firm’s linkages there.  The unstable geopolitical milieu, the fluid domestic operating environment in the US and China, rising costs in China, sensible risk management, and the need to access other markets, though, support more diversification.  All companies, not just Apple, would be wise to pay attention to such advice.  They can get sauced like Apple, but it is unlikely they will sprout new shoots absent timely and sufficient action.

[1] Ma Si and Hu Yumeng, “Apple CEO Hails China’s Innovation Capabilities,” China Daily, March 25, 2025, https://www.chinadailyhk.com/hk/article/607884;Chris Miller and Vishu Venugopalan, “Apple’s Supply Chain,” AEI, June 25, 2025, https://www.aei.org/wp-content/uploads/2025/06/RPT_Miller_Apple-Supply-Chain_June-2025.pdf; and Kimberly Kao, “Apple’s iPhones Top Smartphone Sales in China,” Morningstar, June 13, 2025, https://www.morningstar.com/news/dow-jones/202506132736/apples-iphones-top-smartphone-sales-in-china.

[2] “Apple Boss Tim Cook Visits Shanghai with China Sales under Pressure,” Reuters, March 20, 2024, https://www.reuters.com/technology/apple-boss-tim-cook-visiting-shanghai-2024-03-20; Ma and Hu, “Apple CEO Hails China’s Innovation Capabilities;” and Ma Si, “Apple to Keep Investing in China ‘in a Big Way,’” China Daily, March 26, 2025, https://www.chinadaily.com.cn/a/202503/26/WS67e3c544a3101d4e4dc2b02b.html.

[3] Ucilia Wang, “iForest,” The Guardian, May 14, 2015, https://www.theguardian.com/sustainable-business/2015/may/14/apple-forest-conservation-china-world-wildlife-fund; Ma Si, “Smartphone Giant Helps Boost Worker Skill Levels,” China Daily, May 17, 2022, https://www.chinadaily.com.cn/a/202205/17/WS62830451a310fd2b29e5d244.html;and “Apple Announces $99 million New Clean Energy Fund in China,” Reuters, March 24, 2025, https://www.reuters.com/technology/apple-announces-99-million-new-clean-energy-fund-china-2025-03-24.

[4] Muslim Farooque, “Apple Launches Largest Overseas R&D Lab in Shenzhen Amid Growing Competition from Huawei,” Yahoo!Finance, October 11, 2024, https://finance.yahoo.com/news/apple-launches-largest-overseas-r-191217336.html; “Apple Donates 30 Million Yuan in Support for Coding Education in China,” Xinhua, March 26, 2025, https://english.news.cn/20250326/76b0c7284f404f95afab52fbdf267fdd/c.html;and Wang Keju, “Apple Broadening Ties with Chinese Suppliers to Drive Innovative Solutions,” China Daily, July 16, 2025, https://www.chinadailyhk.com/hk/article/616065.

[5] Monica Miller, “Apple,” BBC, November 6, 2022, https://www.bbc.com/news/business-63538042; Auzinea Bacon, “Smartphones and Computers are Now Exempt from Trump’s Latest Tariffs,” CNN, April 12, 2025, https://www.cnn.com/2025/04/12/tech/trump-electronics-china-tariffs; and Dezan Shira and Associates, “US-China Relations in the Trump 2.0 Era,” China Briefing, August 1, 2025, https://www.china-briefing.com/news/us-china-relations-in-the-trump-2-0-implications.

[6] Ariel Zilber, “Apple CEO Tim Cook Slammed for Gushing Interview with Chinese ‘Propaganda Rag,’” New York Post, June 30, 2022, https://nypost.com/2022/06/30/tim-cook-slammed-for-interview-with-chinese-propaganda-rag; Darragh Roche, “Josh Hawley Blasts Apple CEO Time Cook for Aiding China,” Newsweek, November 30, 2022, https://www.newsweek.com/josh-hawley-blasts-apple-ceo-tim-cook-aiding-china-unconscionable-1763403; andViola Zhou, “Why Apple Can’t Just Quit China,” Rest of World, May 13, 2025, https://restofworld.org/2025/apple-china-dependence-tariffs-india-shift.

[7] Britney Nguyen, “Apple is Losing to Huawei in China,” Quartz, October 16, 2024, https://qz.com/apple-losing-huawei-china-smartphone-iphone-ai-market-1851672936.

[8] Yoko Kubota, “China Bans iPhone Use for Government Officials at Work,” The Wall Street Journal, September 6, 2023, https://www.wsj.com/world/china/china-bans-iphone-use-for-government-officials-at-work-635fe2f8; Arjun Kharpal, “Apple Shares Slide after China Reportedly Considers Probe into App Sotre Practices,” CNBC, February 5, 2025, https://www.cnbc.com/2025/02/05/apple-shares-fall-after-china-reportedly-considers-probe-into-app-store.html; and Zijing Wu, Cheng Leng, and Michael Acton, “Apple and Alibaba’s AI Rollout in China Delayed by Donald Trump’s Trade War,” Financial Times, June 4, 2025.

[9] Arjun Kharpal, “Trump Says He Doesn’t Want Apple Building Products in India,” CNBC, May 15, 2025, https://www.cnbc.com/2025/05/15/trump-told-tim-cook-he-doesnt-want-apple-building-iphones-in-india.html. 

[10] Annie Palmer, “Trump Advisor Navarro Rips Apple’s Tim Cook, Saying He’s not Moving Production out of China Fast Enough,” CNBC, July 7, 2025, https://www.cnbc.com/2025/07/07/trump-navarro-apple-tim-cook-china.html.

[11] Omar Gallaga, “Apple is Moving US iPhone Assembly to India Amid Tariff Turmoil,” CNET, May 2, 2025, https://www.cnet.com/tech/mobile/apple-is-moving-us-iphone-assembly-to-india-amid-tariff-turmoil.

[12] Nguyen Xuan Quynh and John Boudreau, “Apple Suppliers are Racing to Exit China, AirPods Maker Says,” Bloomberg, February 28, 2023, https://www.bloomberg.com/news/articles/2023-02-28/apple-suppliers-are-racing-to-exit-china-airpods-maker-says.

[13] Paolo Colnfino, “Trump Praises Tim Cook, Says Apple Wouldn’t be as Big under Steve Jobs,” Fortune, October 18, 2024, https://fortune.com/2024/10/18/donald-trump-tim-cook-steve-jobs-apple-tariffs; Carolyn Fong and Charlotte Hadden, “Tim Cook Dines with Trump at Mar-a-Lago,” The New York Times, December 13, 2024, https://www.nytimes.com/2024/12/13/technology/trump-tim-cook-mar-a-lago.html; and Filip Timotija, “Apple CEO Visits Mar-a-Lago, Joining List of Tech Execxs Seemingly Courting Trump, The Hill, December 14, 2024, https://thehill.com/policy/technology/5040426-apple-tim-cook-donald-trump-visit.

[14] Chris Isidore and Clare Duffy, “Apple, Facing Tariffs on Chinese Imports, Says It will Invest $500 Billion in US Facilities,” CNN, February 24, 2025, https://www.cnn.com/2025/02/24/tech/apple-investment-united-states; and Yifan Yu, “Apple Raises US Investment to $600bn as Trump Vows 100% Chip Tariff,” Nikkei Asia, August 6, 2025, https://asia.nikkei.com/spotlight/supply-chain/apple-raises-us-investment-to-600bn-as-trump-vows-100-chip-tariff.

[15] Arjun Kharpal, “Apple’s China iPhone Sales Grow for the First Time in Two Years,” CNBC, July 3, 2025, https://www.cnbc.com/2025/07/03/apple-china-iphone-sales-grew-for-the-first-time-in-two-years.html; andKif Leswing, “Apple Reports Biggest Revenue Growth since December 2021,” CNBC, July 31, 2025, https://www.cnbc.com/2025/07/31/apple-aapl-q3-earnings-report-2025.html.