Chinese revenge for Pelosi meeting affecting Apple, says company

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Apple has reportedly warned suppliers of further Chinese retaliation for this week’s controversial visit to Taiwan by US House Speaker Nancy Pelosi. China’s response could disrupt the shipment of iPhones and/or their components.

China has expressed its extreme displeasure with the visit and has taken a wide range of measures – from imposing sanctions on Pelosi and her family to live-fire military exercises in Taiwan’s waters. Now, an additional target of revenge has been revealed, allegedly disrupting iPhone production…

Background

We reported earlier this week that Pelosi had met with Apple chipmaker TSMC during her visit, and it later emerged that she also met with iPhone assembler Pegatron.

Pelosi’s visit to Taiwan was intended to show US support for Taiwan at a time when there is growing concern about 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 itself against any military attack by 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 related to the CHIPS Act and the implications for the company’s Arizona plant. The Taiwanese company was reportedly concerned by suggestions that Intel could get the lion’s share of the subsidies.

Chinese retaliation affecting iPhone shipments

We’ve since learned that Pelosi also met with Taiwanese iPhone collector Pegatron. There have since been reports that China blocked shipments to and/or from Pegatron’s Chinese factories.

Apple has warned its suppliers that China is enforcing a customs regulation that could lead to import and export requests being rejected. Reuters reports.

The iPhone maker told suppliers that China had begun enforcing a longstanding rule that Taiwanese-made parts and components must be labeled as made either in “Taiwan, China” or “Chinese Taipei,” the report added, citing sources familiar with the matter. .

The rule has so far been ‘more honored in the breach than the observance’, but this has now changed, with China insisting on strict compliance.

There are currently conflicting reports as to whether the shipping delays affect both imports and exports to and from China, or only movements of parts between Taiwan and China.

While Apple products are labeled ‘Designed by Apple in California, Assembled in China’, it is possible that shipping documents will list their origin as Taiwan. It seems likely that only the paperwork will need to be changed in order for shipments to be permitted.

If the problem affects the shipment of components from Taiwan for assembly in China, then the problem will be easy to solve if it just involves paperwork, but it would be far more disturbing if any of the components themselves are labeled as ‘Made in Taiwan’.

Pegatron is said to have denied that its shipments are affected, but the wording of its response to media requests appears to be ambiguous. It is variously reported that the company’s statement says that its plant is operating normally (which would be the case either way); that shipments from its Chinese plants were unaffected; or that all shipments (including exports) proceeded as normal.

Regardless, the timing of the disruption isn’t great for Apple as it ramps up production of the iPhone 14 ahead of the launch of this year’s line-up next month.

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Chinese revenge for Pelosi meeting affecting Apple, says company


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