Apple reportedly warned suppliers against another act of Chinese revenge for this week’s controversial visit to Taiwan by US House Speaker Nancy Pelosi. China’s response could disrupt shipments of iPhones and/or their components.
China has expressed extreme dissatisfaction with the visit, enforcing a range of measures – from imposing sanctions on Pelosi and his family, to live-fire military exercises in Taiwanese waters. Now another revenge measure has been revealed that will disrupt iPhone production…
We reported earlier this week that Pelosi had met with Apple chipmaker TSMC during her visit, and it later emerged that she had also met with iPhone assembler Pegatron.
Pelosi’s visit to Taiwan was intended to show American support for Taiwan at a time of growing concern over a possible invasion by China. It was designed to signal to Beijing that the United States is serious about its legal commitment to help Taiwan defend against any military attack from China.
However, many have expressed concern that the visit was more likely to provoke China than deter it, and it has become increasingly clear that this is indeed the case.
Pelosi’s meeting with TSMC was likely about the CHIPS Act and the implications for the company’s Arizona plant. The Taiwanese company was reportedly concerned by suggestions that Intel might get the lion’s share of subsidies.
Chinese revenge affecting iPhone shipments
We have since learned that Pelosi also met with Taiwanese iPhone assembler Pegatron. There have since been reports of China blocking shipments to and/or from Pegatron’s Chinese factories.
Apple has warned its suppliers that China has customs regulations that could result in denial of import and export requests. Reuters reports.
The iPhone maker told suppliers that China has begun enforcing a long-standing rule that parts and components made in Taiwan must be labeled as made in “Taiwan, China” or “Chinese Taipei,” the report adds. , citing sources familiar with the matter. .
The rule has so far been “more honored in violation than in observance”, but that has now changed, with China insisting on strict observance.
There are currently conflicting reports as to whether the shipping delays affect both imports and exports to and from China, or only parts movement between Taiwan and China.
While Apple products are labeled “Designed by Apple in California, Assembled in China,” shipping documents may describe their origin as Taiwan. It seems likely that only the documents would need to be changed for shipments to be permitted.
If the issue affects component shipment of Taiwan for assembly in China, then the problem will be easy to solve if it’s just paperwork, but would be much more disruptive if any of the components themselves are labeled as ‘made in Taiwan’.
Pegatron reportedly denied that its shipments were affected, but the wording of its responses to media inquiries appears ambiguous. The company’s statement is variously reported to indicate that its plant is operating normally (which it would be in both cases); that shipments of its Chinese factories were not affected; or that all shipments (including exports) were proceeding normally.
Either way, the timing of the disruption isn’t ideal for Apple as it ramps up production work on the iPhone 14 ahead of the launch of this year’s lineup next month.
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