Beijing and Washington have something in common: They both have a major Apple problem, and it’s coming to a head. 

Half of Apple’s $391 billion in annual revenue is banked from sales of its flagship iPhone, now the uncontested most profitable consumer product in history.

But 70 per cent of the world’s 1.4 billion iPhones are made or assembled in China.

And mainly with parts made in Taiwan, which China considers a breakaway province and has not ruled out war to force reunification.

What this all means is that Apple is at the epicentre of a head-spinning geopolitical crisis, just as it prepares to release its latest earnings.

Apple and Nvidia trade places as the world’s most valuable companies on America’s S&P. Apple’s $3.35 trillion valuation is seven per cent of America’s leading index.

Apple’s stock performance is so major it makes or breaks the retirement dreams of 330 million Americans, and billions of investors and superannuation holders globally.

Less reported is how reliant Apple’s earnings are on China, and how CEO Tim Cook spent decades building his supply lines there, which shackled its fortunes to Beijing.

That offshore-for-profit-margin strategy was a winner for years, but in the America First era, a Chinese marriage conflicts with the US’ national security interests.

That puts the future of America’s most valuable company at risk, heightens tensions with China, and charts a rocky road ahead for Cook and his Cupertino pals.

America First

The incoming White House is focused on delivering a manufacturing recovery, rebuilding American jobs, and solving a generational cost of living crisis.

It blames a lot of this on China, and its two-decade policy of low-cost labour and mass exports, which it blames for eroding jobs across middle America.

Add to that the global hunger for semiconductors. These are the brains that make AI work, and most are made in Taiwan.

Taiwan is a disputed territory. Beijing has said it will use military force to reintegrate it into the mainland.

The US supports Taiwan’s claim to democratic independence and routinely sends warships up and down the coast causing tensions.

Here too is Apple.

Cook made his name at Apple by vaulting the Bamboo Curtain to build one of the most sophisticated supply chains in history, that’s reliant on Taiwan and China.

Taiwan makes the components. China assembles them, and Apple banks $400 net profit on every iPhone it sells.

It’s worked for years, only…

US, China, Taiwan tensions are now soaring.

“Apple works with 1,600 factories in China,” Doug Guthrie who advised it on Chinese relations told Straight Arrow News. “Apple’s married to China.”

More than five million people are employed directly or indirectly on Apple products. That’s twice as many jobs as Apple supports in the US.

That’s not popular with the MAGA movement and China has a chunk of income, jobs and GDP tied to Apple too.

Respected international thinktank The Council on Foreign Relations estimates that China banks $360 billion-a-year from the Apple relationship.

That’s neck and neck with Apple’s reported 2024 revenue of $391 billion, showing just how interwoven the bickering nations are.

Add to that the fact that 20 per cent of Apple’s revenue comes from the Chinese market, where 212 million have iPhones - far more than the 155 million in the US.

US China trade war

President Donald Trump told world leaders in Davos that he’s a “big believer” in tariffs as a tool to re-shore manufacturing jobs to the US.

“Come make your product in America.” he said. “But if you don’t make your product in America – which is your prerogative – then, very simply, you will have to pay a tariff.”

A trade war with China would break Apple’s supply lines and send its stock crashing.

It would also lead to higher prices for the world’s best-selling consumer products, and load more pressure on cash-poor consumers.

Investors are nervy. Some are reading the runes like me. Apple stock’s down 11 per cent since the start of the year, and $350 billion’s been wiped off its value.

And it all leads to Tim Cook, because it was him - personally - who put the great China plan into effect and hitched America’s most successful company to the East.

Cook’s China play

Apple quarterly financials will show iPhone sales down, and it’s AI and reborn Siri plans remain months away.

It just received a rare underperform rating from Wall Street, with two in three analysts urging investors to sell.

New Apple CEO Kevan Parekh started on January 1. Welcome to the team fella…

But the real story is CEO Tim Cook.

When Steve Jobs convinced him to join as COO from Compaq in 1998, he imagined and rolled out the vision that tied Apple’s fortunes to the rising East.

He told execs that tech “spoiled fast, like milk going off” so he wouldn’t buy cheap components off the shelf in China, he’d create the infrastructure to make them faster.

He signed off tens of billions of investments in Chinese factories, training engineers, building machinery, and shifting Apple IP there to accelerate product development.

In a brilliant in-depth report in the Financial Times, an Apple veteran said: “Supply chain all goes back to one guy: Tim Cook.

“This mess is his fault. This isn’t just the buck stops at the top, it’s that the buck stops with the guy who headed the supply chain. And Tim is the master of supply chain.”

Researcher Kevin O’Marah said Apple didn’t just outsource production, it “tied its fortunes to China in a way that cannot easily be unwound”.

For 15 years, it embedded execs, product designers, and engineers in Chinese factories for months to preach Apple’s philosophy and spent billions on custom machinery.

“All the tech competence China has now is not the product of Chinese tech leadership,” O’Marah says. “It’s the product of Apple going in there and building it.”

The FT concluded: “Interviews with experts, including former Apple executives and engineers, suggest the iPhone maker has few viable paths out and none in the short term.”

And then there’s China.

What’s less talked about is how its fortunes are also reliant on Apple.

Apple needs China

In October 2023, China went public with a claim that 95 per cent of Apple’s products were produced there.

• Apple screens are made by Samsung and LG in South Korea but assembled in China.

• Processors are designed by Apple in the US but manufactured by TSMC in Taiwan and again assembled in China.

• Memory is made by SK Hynix and Samsung in South Korea, as well as Micron in the US, but are again integrated into circuits in China.

• Cameras have been exclusively sourced from Sony in Japan for a decade but are integrated into the iPhone in China.

• Batteries are made by ATL in China and LG Chem in South Korea but again, built into the iPhone in China.

• Even the iPhone case is made by Foxconn and Pegatron in Taiwan but… put together in China.


All of this crashes into the rising America First political narrative, which is why Apple is rushing to diversify away from China.

It’s building capacity in India, Brazil and Vietnam, but the shift will take years and cost billions, PBS reports.

Does China need Apple?

What’s less talked about is how much China leans on Apple.

More than five million Chinese workers are employed directly or indirectly on Apple products across its lattice of manufacturing, assembly and retail sites.

That’s twice as many people as Apple employs in the US, another source of tension with the America First mavens.

Vice President JD Vance told CNBC last September: “Do I think Apple is an evil company? No.

“Do I think sometimes they benefit from Chinese slave labour? Yeah, and that's pretty sick….

“A company that wants to benefit from American markets should also have to pay American workers a fair wage.

“We need to lower taxes on corporations that are creating jobs in this country and raise tariffs on corporations that are shipping jobs overseas.”

Doug Guthrie who advised Apple on its China expansion told American independent news outlet Straight Arrow News: “Apple works with 1,600 factories in China. Apple’s married to China.”

Side note: When my video AI start-up Oovvuu was in hypergrowth, a Chinese Government delegation came to see me.

They offered me a giant office block in Shenzhen and access to its best and brightest AI graduates if I moved my IP and workforce there.

They gave me a leather folder of stamps, and artist impressions of our new glass and steel HQ with a helicopter emblazoned with our logo. If I’d taken it, we’d have been Apple’s neighbour.

Shenzhen in Guangdong Province is home to Foxconn's Longhua Science & Technology Park, often referred to as Foxconn City. The complex employs hundreds of thousands of workers and is a major production site for various Apple products.


A two-hour flight (in my non-existent helicopter) gets you to Foxconn's Zhengzhou Technology Park in Henan Province, known as iPhone City. It’s one of the largest iPhone manufacturing hubs employing ~200,000 workers.


Head west 1,200km and you reach Chengdu, in Sichuan Province, which hosts significant manufacturing operations focused on the iPad.


More iPads and MacBooks are made at Chongqing Municipality and there are Kunshan, Jiangsu Province, focused on assembly.


The war for AI


America’s the world’s largest economy measured by GDP – total goods and services reflecting productivity – but it has problems.

The US is buying more than it sells, so debt is rising, but it has been able to lean on its leadership in tech and AI due to its stock market darlings Apple and Nvidia.

Only China’s outpacing it on growth, population, and selling stuff, and has far more hands ready to get onto the tools as its economic muscle memory grows.

It’s also a fast follower - and by many measures - will soon lead on AI. China’s DeepSeek just arrived like a Howitzer, wreaking havoc on US stocks.

Nvidia’s value plummeted 17 per cent, wiping half a trillion dollars off its value in 24 hours - making it the biggest one-day loss in US history, according to CNBC.

So, what’s Tim to do?

The US’ handling of the TikTok saga indicates that the Trump White House is willing to leverage business deals to soothe international tensions. Apple will be key.

US and Chinese Governments, stocks, millions in China and billions worldwide, and everyone with a pension and investment portfolio is impacted by what happens next.

It’s what happens when regulatory guardrails are ignored for decades and Big Tech becomes larger than most nation states.

When Cook outlines the latest numbers, headlines will focus on slowing growth and profits, but the real story is how it bridges the political East West divide.

He must bake a new strategy to maintain Chinese jobs and efficiency, while placating the rabid America First agenda, and maintaining stock and iPhone prices.

Wow. Good luck.

And it’s already underway.

Reuters just revealed one in four iPhones will be made outside China by the end of the year.

India’s becoming Apple’s go-to for growth, with $14 billion worth of iPhones assembled there in the past year.

The UK’s Sunday Times also reported that Foxconn is following, expanding operations at Sriperumbudur, near Chennai in Tamil Nadu.

India’s also a prime market for the next boom in iPhone sales. Apple lags there today, but 1.3 billion Indians are rapidly getting richer in the third fastest growing economy.

“There's no other market which still has half a billion people without a smartphone,” Navkendar Singh from research firm IDC India told Wired.

And India is a mobile-only market. “People don't buy a laptop, a tablet, and a phone. A phone remains, for 700 million people, the first and the only device,” Singh adds.

And then there’s Taiwan

While your iPhone was built in Apple’s intricate network of factories in China, its processor - the brains that make its wonders work - came from Taiwan.

Taiwan was once part of China, but during a period of economic and social upheaval in 1949, split to establish its own Government, military, and economy.

The island nation is now a thriving democracy about the size of Belgium, and home to 24 million people, making it one of the most densely populated places on Earth.

It’s also the world’s leading supplier of semiconductors, and its hero company TSMC makes 90 per cent of the advanced chips required that push AI development forward.

China considers Taiwan an illegal breakaway, and a breach of its One China principle. It has demanded reunification and threatened it will use military force if needed.

The Taiwan Strait has become a flashpoint for geopoilitical tensions. Beijing has increased military activity, and the US has retaliated by sending battleships to patrol.

Politics, history and technology have converged to make the region a flashpoint for global security.

And in the epicentre again is… Did you guess? Apple.

Apple is TSMC largest customer.

Taiwan manufactures the chips used in nearly all Apple’s products, including iPhones, iPads, Macs, and Apple Watches.

Apple is TMSC’s largest customer; $18 billion last year and a quarter of its revenue.

Apple might design the A-series and M-series chips it’s so good at marketing, but TMSC makes them.

Foxconn and Pegatron, Apple’s largest assembly agents, are also Taiwanese, though many of their factories are in China.

A military conflict with China would cut off supplies, crash Apple’s supply routes, slow AI, and impact both superpowers’ economies. Global turmoil would ensue.

Apple, TSMC, and the US Government are working hard to shift production to plants in Arizona, USA, and Japan, but it will take time.

Help: Australia!

A day after Tim Cook joined Donald Trump on the dais for the President’s inauguration, new Secretary of State Marco Rubio met foreign ministers.

He convened the US’ allies in the Indo-Pacific known as The Quad: Australia, India and Japan, Reuters reported.

American aircraft carrier USS Carl Vinson had just docked after showing off its military might off the Philippines - just close enough to China.

Rubio’s message was clear: We want you ready if there’s a confrontation with China.