Will Apple lose the Chinese market? Suffering heavy losses under US policy pressure

In the complex situation of the US-China trade war, tariffs have become a key variable that affects the fate of many companies. When the United States imposed tariffs of up to 145% on China, the global economic landscape was shaken, and Apple was the first to bear the brunt, suffering a heavy blow in the capital market, with its market value evaporating by nearly $770 billion overnight. This dramatic change not only highlights the huge impact of trade policies on multinational companies, but also arouses widespread concern about the future direction of Apple: How long can Apple last in the storm of this tariff war?

As a leader in the global smartphone industry, Apple's brand influence has long been deeply rooted in the hearts of the people. However, an in-depth analysis of its global sales map shows that the Chinese market occupies a pivotal position in its revenue system. For a long time, Apple's sales in the Chinese market have almost supported half of its global performance. From the early days of rapidly opening up the Chinese high-end smartphone market with leading technology and fashionable design, to now becoming a high-end symbol in the minds of many consumers, Apple has been deeply bound to the Chinese market. However, under the oppression of the Trump administration's tough tariff policy, Apple's operations in China face unprecedented challenges.

In the manufacturing link, Apple's supply chain system is highly dependent on Sino-US bilateral trade. From raw material procurement to parts processing to the final assembly link, Chinese factories undertake most of the manufacturing processes of Apple products. Take the iPhone as an example. Its production requires various parts, from precision chips to ordinary screws, which rely heavily on imports from the United States to China for assembly. Under the impact of tariffs, the cost of this complex supply chain model has risen sharply. According to statistics, Apple's manufacturing business in China has long been stable at around 80%, and this structure has hardly changed in the past decade. This means that Apple has been deeply embedded in China's manufacturing ecosystem, and it is almost an impossible task to move its manufacturing business back to the United States in the short term. Without China's complete supply chain system, Apple's production operations will fall into chaos and may even face the dilemma of being unable to operate normally.

At the same time, changes in the Chinese market's demand for Apple products also directly affect its global performance. In recent years, with the rise of Chinese local smartphone brands and increasingly fierce market competition, Apple's mobile phone market share in China has fluctuated significantly. In the first quarter of 2024, Apple's market share in China fell by 19.1% year-on-year, sales fell by 24%, and shipments fell out of the top five. Although in the third quarter of the same year, Apple returned to the top five with a market share of 15.6% thanks to the popularity of new products, there is still a big gap compared with the peak period. In addition to the impact of intensified domestic market competition, this market share fluctuation is also an important factor in consumers' re-evaluation of the cost-effectiveness of Apple products in the context of the trade war, as well as concerns about the stability of future product supply.

Further from the dual dimensions of production and sales, Apple's dependence on the Chinese market presents a mutually dependent relationship. On the production side, China has a strong and mature supply chain system, a large and highly qualified industrial workforce, a complete set of upstream and downstream supporting enterprises, and a developed logistics and distribution network. These advantages provide a solid guarantee for Apple's efficient production. Data shows that about 90% of Apple's mobile phone production capacity is concentrated in China, a figure that intuitively reflects China's core position in Apple's global production layout. On the sales side, Greater China contributed 17.1% of Apple's total revenue in fiscal year 2024, becoming its third largest market in the world. Such a high revenue share is enough to prove the importance of the Chinese market to Apple's overall performance.

Once Apple loses the Chinese market, it will face a double blow to production and sales. In terms of production, although Apple has tried to promote supply chain diversification in recent years and increase investment in India and Vietnam, these regions have a huge gap with China in terms of labor quality, infrastructure construction, and supply chain perfection. Take India as an example. Its labor force skill levels are uneven and infrastructure construction is lagging, resulting in low production efficiency and difficult to ensure product quality. Vietnam's supporting capacity in the field of high-end manufacturing is insufficient to meet Apple's requirements for high precision and high stability of components. This makes Apple's capacity expansion plan in these regions slow and difficult to replace China's production capacity in the short term.

As one of the world's largest consumer markets, China has strong consumer purchasing power for smartphones. Without the Chinese market, Apple's global sales and revenue will suffer a heavy blow, and other markets in the world will find it difficult to fill this huge revenue gap in the short term. Especially in the high-end smartphone market, Chinese consumers are highly receptive to new technologies and new products, and there is a clear trend of consumption upgrading. Apple originally took the lead in this market segment with its brand and technological advantages. However, as the trade war continues, consumers' willingness to buy Apple products has been suppressed, which poses a severe challenge to Apple's brand value and market position.