In 2018, Apple announced plans to invest $430 billion in the US over the next five years. This was a clear sign that the company was aware of the impending shift in the global manufacturing landscape away from China.
Indeed, Apple is heavily reliant on China for the assembly of its products. But the move away from China is already underway, and Apple is well positioned to make the transition.
In this article, we’ll take a closer look at Apple’s reliance on China for manufacturing, the company’s plans for US expansion, and the changes that are happening in the global manufacturing landscape.
Apple’s Reliance on China
For years, Apple has relied heavily on China for the manufacturing of its products. According to a recent report from Reuters, Apple has some two million workers in China assembling iPhones, iPads, and other devices.
This reliance on China is largely due to the country’s vast manufacturing infrastructure and low labor costs. But it’s also due to the fact that Chinese law stipulates that foreign firms must partner with a local company in order to manufacture in the country.
As Apple’s iPhone sales have slowed in recent years, the company has been increasingly relying on its services business to generate growth. This shift has led to a need for more data centers and other infrastructure in the US, which is why Apple’s plans to invest $430 billion in the US over the next five years is significant.
The $430 Billion Plan
Apple’s $430 billion investment plan was announced in 2018 and is part of the company’s larger $1 trillion commitment to the US economy. The plan includes a $100 billion investment in data centers, $5 billion for retail stores, and $30 billion for other buildings and facilities.
Importantly, the plan also includes a $350 billion commitment to US suppliers and manufacturers. This is a clear sign that Apple is looking to increase its manufacturing presence in the US.
The company has already begun to make good on this commitment. In 2019, Apple announced that it would invest $1 billion in a new campus in Austin, Texas. The campus will house 5,000 employees and will eventually expand to accommodate 15,000 workers.
The move away from China
The global manufacturing landscape is shifting, and Apple is well positioned to make the transition.
The primary driver of this shift is the US-China trade war. The tariffs imposed by the US have made manufacturing in China significantly more expensive. As a result, many companies are looking to move their manufacturing operations out of China.
In addition, the Chinese government is cracking down on foreign companies operating in the country. This has led to increased scrutiny of Apple’s manufacturing partner, Foxconn.
Foxconn is the largest private employer in China and has been accused of violating labor laws. The company has also been accused of environmental violations. As a result of the increased scrutiny, Foxconn has been looking to move some of its manufacturing operations out of China.
Apple is already ahead of the curve in this regard. The company has been diversifying its manufacturing base for years, and now has operations in 30 countries. Additionally, Apple has been working to increase its manufacturing presence in the US.
The company currently has two manufacturing facilities in the US, and its plans to invest $430 billion in the US over the next five years will likely result in the establishment of more US manufacturing operations.
Apple is heavily reliant on China for manufacturing, but the company is well positioned to make the transition as the global manufacturing landscape shifts away from China.