Venture capitalist, early Facebook investor and PayPal co-founder Peter Thiel criticized Apple for being too close to China.
At a virtual event held Tuesday by California nonprofit Richard Nixon Foundation, Thiel said the United States should put a “lot of pressure” on Apple because of its links to the Asian country.
″Apple is probably the [company] that’s structurally a real problem, because the whole iPhone supply chain gets made from China,” Thiel said. “Apple is one that has real synergies with China.”
He made similar statements about Google being too closely involved with the country, due to the company’s reported artificial intelligence with Chinese universities.
“Since everything in China is a civilian-military fusion, Google was effectively working with the Chinese military, not with the American military,” Thiel said. Google called the allegations “baseless.”
Apple’s links with China
China has always been a tough subject for Apple. Cupertino relies on China in two key ways: as customers and as manufacturers.
The overwhelming majority of Apple products are made in China, which is why clashes over trade — such as happened under former President Donald Trump — cause challenges. Apple also previously used manufacturers linked to human rights abuses, such as forced Uighur labor and illegal underaged workers.
Apple took steps to improve conditions at companies in its supply chain. But it also allegedly lobbied to weaken bills barring U.S. businesses from working with certain problematic companies in China.
On the customer side, Apple increasingly relies on China as its future biggest market. Apple CEO Tim Cook talked about designing products specifically for the Chinese market.
As a U.S. company operating in China, Apple also must play by the country’s rules. This means banning certain software, such as encrypted messaging apps like Signal, barred under Chinese law. Apple also agreed to store local iCloud data on Chinese servers and blocked the Taiwan flag in Chinese software.
Even so, whenever the United States does something to upset China, we hear rumblings on the country’s state-owned news outlets about how the actions could hurt Apple.
Cook rarely criticizes China. When he has spoken about the country, such as at a 2017 appearance at China’s World Internet Conference, he has talked about subjects like “privacy, security and humanity” only in the broadest terms. In late 2019, Apple was notably MIA at a congressional hearing about tech companies and China.
In all, it’s a challenging area. During Q1 2021, China pulled in revenues of $21.3 billion for Apple. That compares to $27.3 billion in Europe and $46.3 billion in the Americas. Pulling out of China altogether probably isn’t an option. Apple is making moves to lessen its manufacturing reliance on the country. But as a customer base, it’s hard to see where that lost revenue could come from. (Apple remains a bit player in the similarly sized India.)