A tense political and economic battle is currently taking place between Washington and Bejing over sanctions on major Chinese companies including Huawei and key gov. officials.
China has strongly condemned the sanctions warning of an all-out political war if not removed. It’s worth noting the tension isn’t new. President Trump blaming China for the spread of COVID19, and a Chinese law threatening the democratic state of Hong Kong has damaged an already fragile relationship between the two nations.
In response to sanctions on Huawei and the company’s ability to operate in the American market with American companies, China punched back. On May 15th, an outlet for the Chinese regime posted a report quoting “sources” saying the country would place Apple on its “unreliable entity list,” and would impose restrictions on the $1 trillion tech giant.
If China isn’t bluffing, the implications for Apple are significant. Apple is heavily reliant on the Chinese economy and workforce to produce the majority of its products. The Chinese government is well aware of this reliance and has signaled it is not afraid to use restrictions as a political tool to get what it wants. The initial report did not specify what the “restrictions” would look like, but it could indirectly target major Apple supplier’s inevitability hurting Apple’s performance worldwide.
The threats surfaced the same day TSMC announced it was building a plant in the United States. Following sanctions from the White House, TSMC proceeded to suspend chip orders from Huawei. The suppliers move into the US highlights Apple’s eagerness to venture out of China. The company is already investing in producing some of its most popular products elsewhere. The hit AirPods lineup is partially being produced in Vietnam, with iPhone production possibly relocating to India.
Moving forward the tension is only likely to rise. President Trump is set to hold a press conference on May 29th at 11 AM PT time in regards to China where he is expected to announce a slew of new economic sanctions. The response from Beijing likely to come in the hours following will give us a clear indication of the nature of this situation.