The corporate spin has Apple pivoting toward India and other foreign nations in an attempt to reduce China’s towering influence over the creation of its core iPhone product. But the reality is quite different. A new report states the Big Tech behemoth is more beholden than ever to the tyrannical communist superpower in the manufacturing of its new iPhone 14 as sales within the country boom amid claims of increased Chinese corporate espionage.
‘Critical Work Provided By China’
The iPhone 14 was officially unveiled on Sept. 7. As The New York Times noted in an article one day earlier, Chinese production processes were critical. “[T]he iPhone has gone from being a product that is designed in California and made in China to one that is a creation of both countries,” The Times wrote.
The paper highlighted how Apple, like so many American companies, fell into a “cheaper to make” trap:
“The critical work provided by China reflects the country’s advancements over the past decade and a new level of involvement for Chinese engineers in the development of iPhones. After the country lured companies to its factories with legions of low-priced workers and unrivaled production capacity, its engineers and suppliers have moved up the supply chain to claim a bigger slice of the money that U.S. companies spend to create high-tech gadgets.”
Alas, having a communist tyranny with a known affinity for clamping down on its citizenry via heavy-handed Orwellian surveillance methods crafting your new cutting-edge smartphone is not a stellar public relations move these days. Escalating tensions between the US and China add to the executive suite’s discomfort. The company has been looking to increase supplier options elsewhere but finds itself inexorably bound to the enormous China economic engine.
“They want to diversify, but it’s a hard road,” Gene Munster, a technology research firm executive, told The Times. “They depend on China for so much.”
Customer Base of Their Dreams
Apple simply cannot afford to irritate its communist business partners. Along with the newfound engineering dependency comes the irresistible lure of a market sized at 1.45 billion potential customers.
Research firm Strategy Analytics reported in June that the company raked in a financial windfall at China’s annual June 18 midyear online shopping festival. “Fourteen million units of smartphones were sold” during the gargantuan event, Strategy Analytics stated, and “Apple solidified the leadership at the expense of Chinese brands.” “Apple outperformed the market, selling nearly 7 million iPhone units,” the report continued. That accounts for one out of every two smartphones purchased at the festival. The firm estimates the company earned a whopping $6.3 billion in revenue. No American-based multinational firm will ever give that up, no matter how amplified the plight of the Uighurs becomes.
Worms in the Apple
(Photo by STR/NurPhoto via Getty Images)
The unsavory side of supping with the Chinese goes beyond slavery, however. Corporate espionage is also a staple, and Apple has become caught in that tangled web as well.
The head of Chinese electronic components manufacturer Luxshare has been indicted in Taiwan for using a local shell company to conduct business without government approval.
“Luxshare joined the exclusive club of global iPhone assemblers in recent years, marking a seismic shift to a decade-old production model just as Washington-Beijing tensions escalated,” Bloomberg News reported September 1. “It struck a deal to acquire Wistron Corp.’s iPhone unit and become the first mainland [Chinese] company to assemble Apple Inc.’s marquee device.”
Taiwanese officials see Luxshare as actively working to purloin the island nation’s renowned technology skills. In July, Reuters reported that Taiwan officials had conducted a year-and-a-half-long probe of the company’s attempts to steal commercial secrets from a Taiwanese supplier.
(Photo by Tayfun Coskun/Anadolu Agency via Getty Images)
Prosecutors found that Luxshare “‘lured’ Catcher [Technology’s] China-based research and development team with promises of high salaries and stole business secrets from the Taiwanese firm, causing them big losses,” the wire service stated. “Luxshare was doing this in order to be able to ‘quickly build factories and mass produce cases for iPhones, iPads and other products,’” a statement from prosecutors read.
Apple was originally drawn to China by the appeal of low-wage labor for iPhone assembly, The Times emphasized. “The work accounted for about $6 — or 3.6 percent — of the iPhone’s value, according to a study by Yuqing Xing, an economics professor at the National Graduate Institute for Policy Studies in Tokyo.”
“Gradually, China nurtured homegrown suppliers that began to displace Apple’s suppliers from around the world,” the paper relates. “Its suppliers now account for more than 25 percent of the value of an iPhone, according to Mr. Xing.”
The launch of the new iPhone 14 has made for splashy news headlines across America. But as eager consumers line up to upgrade their phones, how many of them are aware of the ever-expanding fingerprint baked into the product by what numerous leading authorities consider to be the single greatest national security threat to the United States today?
