Apple Supplier Pegatron Denies Reports of China Blocking Shipments

Apple supplier Pegatron has denied media reports claiming shipments to and from its factories in China were being held for scrutiny by Chinese customs officials after a Pegatron executive met with US House Speaker Nancy Pelosi (via DigiTimes).

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In a filing with Taiwan’s stock exchange, the company indicated that iPhone production at its China-based sites is continuing as normal and shipments have not been affected.

The reports emerged after Pegatron Vice Chairman Jason Cheng met with Pelosi on Wednesday at a luncheon hosted by Taiwan President Tsai Ing-wen. TSMC founder Morris Chang and chairman Mark Liu were also among the guests.

Pelosi’s visit to Taiwan has angered the Chinese government, which sees the island as a breakaway province that will eventually become part of the country, despite many Taiwanese considering their self-governing island a separate nation.

In response to the visit, China is currently conducting live-fire military exercises in and around the Taiwan Strait, with some aircraft and naval vessels reported to have crossed the median line, an unofficial but once largely observed border separating Taiwan and China. Chinese media reported on Friday that its missiles flew over Taiwan during their latest drills.

Pegatron is the second-largest Taiwanese contract electronics manufacturer and ‌iPhone‌ assembler behind Foxconn, while TSMC is the sole supplier of Apple’s custom silicon chips and the world’s most valuable semiconductor company. All three companies operate factories in China.

Apple has sought to diversify its supply chain outside of China to reduce its reliance on the country and mitigate the impact of geopolitical unrest, with Vietnam and, more recently, India becoming important locations for supply chain expansion and investment.

Update: Nikkei reports that Apple on Friday asked suppliers to ensure that shipments from Taiwan to China strictly adhere to Chinese customs rules, which state that Taiwanese-made parts and components must be labeled as made in either “Taiwan, China” or “Chinese Taipei,” language indicating that the island is part of China.

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