Apple Inc. AAPL CEO Tim Cook previously explained the company’s decision to continue manufacturing its products in China, refuting the widespread belief that it’s due to low labor costs.
What Happened: A 2024 video of Tim Cook has resurfaced, providing insights into Apple’s manufacturing choices amid the ongoing U.S.-China tariff war. In the video, posted on X by CNBC TV18 reporter Nigel D’Souza, Cook dismissed the idea that Apple’s manufacturing in China is due to low labor costs, stating, “China stopped being a low labor cost company many years ago.”
Instead, he emphasized China’s unparalleled skilled labor concentration in one location and advanced tooling capabilities as the primary reason. Cook emphasized that “the products that we do require truly advanced tooling.”
On that note, Cook emphasized the sharp difference in vocational skills between the US and China. The Apple CEO stated, "In the US, you could have a meeting of tooling engineers, and I’m not we could fill the room." In China, however, "you could fill multiple football fields…. Hence, the vocational expertise in China is very deep”.
Why It Matters: The U.S.-China tariff war has put pressure on American companies to shift production back home. Earlier this month, a leading tech analyst predicted a significant price hike for Apple iPhones if manufacturing shifts to the U.S., potentially reaching around $3,500. This is due to the complexity of recreating the production ecosystem that currently exists in Asia.
Furthermore, experts opined that Apple’s supply chain could face major disruptions due to new reciprocal tariffs. Apple had temporarily dodged steep tariffs on Chinese-made electronics following an exemption granted by Trump.
A recent report also suggested that Apple completed an urgent logistics operation, transporting five planeloads of iPhones and other products from manufacturing centers in India and China to the U.S. within 72 hours, in a bid to beat President Donald Trump's new 10% reciprocal tariff on imports.
Given these complexities, Cook’s emphasis on China’s skilled labor and advanced tooling capabilities provides a clearer understanding of Apple’s manufacturing decisions.
Apple has lost over $500 billion in market capitalization since the Apr 2 ‘Liberation Day’ tariffs. On Friday, the stock climbed 4.06% to close at $198.15, as per Benzinga Pro.
Apple holds a momentum rating of 62.11% and a quality rating of 86.50%, according to Benzinga's Proprietary Edge Rankings. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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