China Blocks Apple’s Production Plans Amid Military Tech Crackdown

Chinese authorities are imposing stricter export controls on Apple as part of a broader initiative to regulate technologies deemed to have potential military uses.

While these heightened constraints are officially justified by security concerns, many observers suspect that the motivations are more deeply rooted in economic and political factors.

Apple’s Strategy to Decrease Reliance on China

For years, Apple has recognized the necessity of reducing its dependency on China as a manufacturing hub. Consequently, the company has been incrementally expanding its production capabilities in countries such as India, Vietnam, and beyond.

India has emerged as Apple’s primary alternative manufacturing base, with bold projections suggesting that by 2025, as much as 25% of all iPhones could be produced in India, potentially escalating to 50% by 2027.

Although progress has been slow, a significant milestone was achieved last year when iPhone 16 production began in India shortly after the device’s launch. This marked the first instance of a flagship phone being manufactured in India so early in its product lifecycle. Reports indicate that Apple aims to kick off iPhone 17 production simultaneously in both China and India.

Alleged Crackdown on Military-Related Technologies

Given that a significant portion of iPhone components are sourced from China, Apple relies on exporting these parts to India and other production sites. According to Nikkei, these exports have faced delays due to a new regulation introduced by the Chinese government last month.

Chinese scrutiny on exports from Apple and other American tech firms is tightening, complicating their efforts to shift production to Southeast Asia and India, as reported by multiple sources familiar with the situation.

The enhanced customs inspections pertain to dual-use technology export controls implemented by Beijing in early December, resulting in shipment delays of production equipment and materials to Vietnam and India spanning several days or even weeks.

The term “dual-use” describes technologies that the Chinese government asserts may have both civilian and military applications.

Possibly Driven by Economic and Political Factors

This situation has spurred other American tech giants, including Dell and Microsoft, to expedite their efforts to shift manufacturing out of China.

“In my view, the threats of a trade conflict from Trump and the declining state of the Chinese economy are key factors leading to these intensifying Chinese customs checks,” stated tech supply chain expert Chiu Shih-fang in an interview with Nikkei Asia.

Insiders indicate that even components not classified as dual-use are still feeling the impact of these new regulations.

“What concerns us more is that some items and tools not even on the dual-use list are undergoing stricter scrutiny at customs simply due to having similar HS codes,” commented a representative from another American firm familiar with the issue. “Some equipment for speed testing smartphones might also be evaluated under the assumption that it could relate to military applications.”

The report outlines various materials and equipment that have been affected by these stringent checks.

Photo by National Cancer Institute on Unsplash