Opinion | Will India benefit as China’s Covid-19 lockdowns hit Apple supply chains?

The economic consequences of China’s zero-Covid policies are now growing more apparent. Since last year, economists have warned of a downturn in the Chinese economy, pointing to weakening industrial profits and slowing retail sales growth.

One multinational company deeply burned by China’s Covid-19 policies is at the heart of Big Tech – Apple Inc. With more than 90 per cent of Apple’s iPhones, iPads and Macbook laptops manufactured in China by independent contractors, according to analyst estimates, Apple has been heavily reliant on Chinese manufacturing for well over a decade. That relationship is the source of deep discomfort for some in the West.

While Apple has up to now refused to reconsider its relationship with China, Covid-19 policies may have emerged as a potential deal-breaker. In May, The Wall Street Journal reported that Apple is looking to boost production by seeking out other manufacturing hubs in a move to lessen its dependence on China. This could well be India’s gain.

Since last year, Apple has been contending with extended supply-chain disruptions as a result of China’s Covid-19 prevention measures. On April 20, Taiwanese company Foxconn, Apple’s biggest supplier, suspended production in two mainland Chinese factories in the eastern city of Kunshan after a surge in cases. In May, it froze the recruiting of new personnel at its huge technology park in Zhengzhou, in central China, after the local government announced a seven-day lockdown.

At the end of May, troubling reports emerged of workers in another Apple supplier’s factory clashing with guards after being forced into lockdown mode and quarantined at work for nearly two months. Apple’s supply-chain disruption and cost-control measures amid chip and component shortages during the pandemic have affected the profits of its Chinese suppliers.