Core Viewpoint - Apple is increasingly distancing itself from China, focusing on maximizing profits while reducing reliance on Chinese suppliers and manufacturing, amidst a backdrop of escalating trade tensions between the US and China [1][68]. Group 1: Apple's Market Position - Apple generated $64.6 billion in revenue from the Chinese market last year, making it one of the largest foreign companies operating in China [3][4]. - Despite its significant revenue from China, Apple's share of components sourced from Chinese suppliers has dwindled to just 2% [7][20]. - In the first quarter of this year, Apple saw its market share in China shrink, with Huawei surpassing it to become the market leader [9][46]. Group 2: Supply Chain Dynamics - Apple employs a "wolf-raising" strategy, squeezing profits from existing suppliers while nurturing secondary suppliers to prevent any single supplier from becoming too powerful [6][23]. - The company has shifted low-value manufacturing to developing countries, maintaining high profit margins by controlling design and marketing [12][18]. - In 2024, Apple captured 18% of global smartphone shipments, commanding nearly half of the market size and 80% of industry profits [13][18]. Group 3: Production Shifts - Apple plans to increase its manufacturing presence in India, aiming for 25% of its production to occur there by 2025 [26][32]. - The number of Apple factories in Vietnam has risen from 15 in 2018 to 35 currently, indicating a significant shift in production strategy [29]. - The share of iPhone production in India has increased from 1% to 14% over four years, while China's share has decreased from 98% to 85% [38]. Group 4: Financial Performance and Challenges - Apple's net profit margin reached 24% in the 2024 fiscal year, while the average net profit margin for 22 listed Chinese suppliers is only 4% [18]. - The decline in Apple's reliance on Chinese manufacturing has led to significant economic impacts in regions like Zhengzhou, where mobile phone exports dropped by 49.1% in the first half of 2024 [40][41]. - Companies like Luxshare Precision and OFILM have begun diversifying their business models to reduce dependence on Apple, with Luxshare expanding into automotive components [50][52]. Group 5: Competitive Landscape - Huawei has rebounded strongly, capturing 19.4% of the Chinese market in the first quarter, while Apple's market share has declined by 7.7% [46]. - The shift in consumer preferences towards domestic brands like Xiaomi and Huawei is contributing to a decline in Apple's market dominance in China [61][62]. - Apple faces increasing competition not only from domestic brands but also from its own supply chain partners, who are diversifying their client bases [50][58].