Apple’s supply chain dependence on China despite diversification efforts

Even with Apple’s attempts to diversify its supply chain, China continues to house over one-third of its production facilities. In the last fiscal year, Apple added eight contractors to its Chinese supplier base and removed four, marking the first increase since 2021, according to the recently released supplier list. Apple updates its contractor roster annually due to factors such as quality and environmental issues and has now reinstated three previously excluded Chinese suppliers.

Last year, 157 contractors in China contributed to Apple’s manufacturing, an increase from 151 in the previous year and accounting for 98% of the company’s global material and assembly expenditure. Apple’s CEO, Tim Cook, was quoted as saying that “there’s no supply chain in the world that’s more critical to us than China” during his recent visit to the country.

Why does this matter?

In the face of geopolitical unrest and trade disputes with China, tech giants are increasingly facing pressure to diversify their production bases. While China remained Apple’s main source of new suppliers last year, the company has made some progress in reducing its reliance on Chinese supply chains by ramping up production in South and Southeast Asia. Among Apple’s 13 fresh suppliers last year, most were located in China, but two came from Taiwan and one each from Japan, Norway, and India.