Producing 98% of the world’s iPhones Apple’s dependence on Chinese manufacturing has been deep: it is too difficult to move away

BEIJING, Sept. 30 (Xinhua) -- Apple's dependence on China remains high despite the company producing its latest iPhones in India earlier than ever before and its largest OEM Foxconn investing $300 million to expand production facilities in Vietnam.

Currently, Apple makes about 98 percent of its iPhones in China, and it will take about eight years to move just 10 percent of that capacity, analysis shows. China has a large number of local component suppliers, which makes it hard for Apple to leave, not to mention a modern and efficient transportation, communications and power supply network.

"Since China accounts for 70 percent of global smartphone manufacturing capacity and top tier Chinese phone brands account for nearly half of global shipments, it has a well-established supply chain that will be difficult to replicate. Apple could lose this supply chain if it exits." Steven Tseng and Woo Jin Ho, analysts at Bloomberg Industry Research, said in the report.

U.S. technology companies have been investing in China for more than 20 years, pouring tens of billions of dollars into building the complex production chains necessary to provide for the e-commerce boom. Dismantling those ties could take just as long and could cause lasting damage to an already battered global economy.

By contrast, Apple's reliance on China is significantly higher than that of many other U.S. technology companies. Amazon, Hewlett-Packard, Microsoft, Cisco Systems and Dell also rely on China to produce hardware for servers, storage and networking products, but they rely on China to a far lesser extent than Apple.

In addition, China's booming market is subjecting U.S. suppliers to opportunity costs. Data show that in the past four quarters, the world's 20 fastest-growing chip companies, on average, about 19 are located in China.