Apple: How The American Industry Transferred To China

Garage to Tech Giant: Story of Apple

Like many other American tech giants, Apple was founded in a garage in California. The first product, the Apple I, released in 1976 by Steve Jobs and Steve Wozniak, was nothing more than a simple motherboard. It was so simple that Wozniak's sister, Patty, manufactured it at home, and only 200 units were produced. Following the successful sales of the Apple I, the team, thanks to Patty's connections, expanded their home manufacturing capabilities. The Apple II was produced in larger quantities, employing housewives and Mexican immigrant workers known to Patty.

Entering the technology manufacturing world with a remarkably modest and flexible production capacity, Apple increased its Apple II sales from 2,500 units to 7,600 in its second year. The following year, 35,000 units were sold, and in 1980, that number reached 75,000. Experiencing tremendous growth, the company went public that year and was predicted to be a pioneer of the personal computer revolution. With this story, all shares offered were sold, resulting in record sales. Jobs and Wozniak joined the millionaire club overnight.

With the growth of the personal computer market, giant players in the industry began to enter the market. Competition became increasingly fierce with the release of IBM's first computer and the launch of Windows. While giants like IBM worked with suppliers like SCI, who possessed massive manufacturing facilities, Apple, with its modest production capacity, could not compete on price. The first Macintosh product, released after the IPO, was much more expensive than its competitors and also lagged behind in terms of features.

During this period, thanks to the ties developed with Japan, Apple released its first product outside of computers. The product, called LaserWriter, was, as the name suggests, a laser printer. The laser printer was sold as a bundle with the Macintosh through promotional campaigns. Apple also developed a partnership with Adobe, a company that was still relatively new at the time. Adobe developed design software, while Apple offered the Macintosh computer and laser printer as a bundle deal. In this way, the Macintosh became the preferred choice for professionals working in print and design. Apple thus became a cult icon in the design and art world. The Macintosh was expensive, but anyone working in design or publishing had to own it. Apple had become a business and prestige product.

However, the high costs associated with both hardware and software development put Apple under pressure to price its products. Apple's competitors weren't bothering with software development and were using the rapidly popular Windows operating system; Apple, on the other hand, had to develop its own operating system, incurring extra costs. While the board of directors focused on the Apple II, which still had very good demand and was generating cash, Jobs was struggling to develop the expensive and unprofitable Macintosh and Apple software. As a result of financial crises and conflicts with management, founder Steve Jobs decided to leave the company in 1987.

In the post-Jobs era, while strengthening its ties with Japan, Apple began making its first investments in Taiwan. Although Taiwan was technologically behind at the time, Apple's "manufacturing academies" trained the local workforce and laid the foundation for Apple's future Asian ecosystem. At that time, Apple focused on Taiwan and Singapore, places lacking technological expertise but possessing cheap labor, rather than countries like Japan and South Korea, where US companies were heavily concentrated, thus achieving price competitiveness. Apple executives provided not only technology training but also business and entrepreneurship training in Taiwan and Singapore, encouraging people to engage in manufacturing. They helped establish factories, stood alongside entrepreneurs on production lines, showed them how to manufacture, and provided financial support.

In this way, Apple became not only a company that merely develops technology but a massive strategic hub exporting high technology to the entire world, even without owning a single factory.

Meanwhile, after leaving Apple, Steve Jobs founded yet another personal computer company. This venture, called NeXT, used its own operating system, just like Apple. Jobs didn't achieve the same success with NeXT as he did with Apple, and sales figures fell far short of expectations. In a market where competing with Windows was already quite difficult, Apple was filling the share for the non-Windows operating system.

Although Apple had created a huge cult following with the Macintosh, LaserWriter, and Adobe bundle, the company's sales became limited to a specific group, and after a while, sales stagnated, bringing the company's growth to a standstill. In 1996, Apple entered a major financial crisis, reaching a point where it was struggling to even pay its debts. Apple needed bigger innovations to expand its user base. CEO Gil Amelio, who needed to make radical decisions, was unable to meet the expectations of the board of directors and implement the expected reforms.

Apple, on the verge of bankruptcy, received an offer from SCI to buy it out. Serious negotiations took place regarding the sale. However, this sale somehow did not materialize, and Amelio made a radical decision, offering to buy the software department of Steve Jobs' company, NeXT. It was considered sheer madness for a company that couldn't even pay its debts to try to buy another company. However, the sale went through. With this acquisition, Steve Jobs and his 200-person software team joined Apple. This move, seen as madness, brilliantly brought Steve Jobs back to the company. And with the software team that came with him, effective improvements were made to the Mac OS operating system in a short time.

Amelio initially appointed Jobs as his advisor, but after Amelio was also removed from his position, Steve Jobs was appointed as interim CEO. Jobs brought Jony Ive to the position of Apple's design leader and appointed Tim Cook as vice president of global operations. The iMac G3, designed by Jony Ive and released in 1998, saved Apple from bankruptcy and further solidified Jobs' position. Tim Cook, on the other hand, strengthened relations with China, creating the infrastructure that helped Chinese supplier companies with the challenging production processes of the iMac. At that time, Apple was able to do things that other companies could not do thanks to its proximity to and control over China's production lines.

The challenging production processes of the iMac G3 were made possible thanks to extensive collaborations with Terry Guo's Taiwanese company, Hon Hai Precision. Hon Hai Precision's manufacturing facility in Shenzhen, China, perfectly combined Taiwan's technological expertise with China's cheap labor. Hon Hai Precision has grown into a giant company, now known as Foxconn, which manufactures Apple products across hundreds of facilities. Foxconn is the manufacturing giant behind the revolutions Apple achieved with the iPod, and later the iPhone and iPad.

Apple's investments in Taiwanese academia paved the way for business leaders like Terry Guo, while Terry's investments in China initiated the transfer of Taiwanese technology to China. When Terry opened his first manufacturing plant, Shenzhen was a small fishing town with a population of 70,000; today it has become a metropolis with a population of 30 million. Thanks to the manufacturing plants opened by Foxconn, the city's population rapidly began migrating from rural areas to work in the factories.

The iMac G3, being assembled and exported from China, marked the first time a mainstream high-tech product was manufactured outside of America and then imported into the United States.

With the rapid advancement of technology, the miniaturization of chips and memory cards, and the development of LCD screen technology, the idea of ​​creating a small, portable MP3 player emerged at Apple. The first iPod was released with a small LCD screen, navigation buttons, and a capacity to store a thousand songs. It was a revolutionary product compared to the Sony Walkmans of the time, which were cumbersome and required cassettes. To load music onto the iPod, a Mac was needed. This allowed Apple to achieve enormous profitability. With the iPod's sales exceeding expectations, Foxconn, its manufacturer, began opening many new factories in various parts of China. Seeing the production potential in China, other American and European companies also began relocating their production facilities or outsourcing production to companies like Foxconn. Foxconn also began acquiring American customers in addition to Apple. From the early 2000s onwards, while American industry began expanding to various parts of the world, a large portion of it actually moved to China.

In his book Apple in China, Patrick McGee mentions how this re-industrialization movement, carried out under the name of "globalization," actually soon turned into "Chinafication."

Apple achieved enormous profitability thanks to the iPod, to the point that it began to overshadow the Mac, but Steve Jobs argued that the focus should be more on computer technology. A different kind of revolution was needed in computer technology. The integration of the then-developing touchscreen technology into computers was considered. However, the technology was not yet advanced enough to create tablets, resulting in very clunky and impractical devices, and this idea was abandoned.

The development of touchscreens and the iPod led Apple to a new revolutionary idea. In secret meetings with suppliers, Jobs initiated work on producing smaller antennas so that an antenna could be added to the iPod. Simultaneously, discussions were held with Japanese and South Korean companies for smaller RAM and memory chips, and with Samsung and Intel for processors. Jony Ive again designed the iPhone. Jobs kept the iPhone idea secret for a long time. Apple's board gave Steve Jobs the space to work independently with a team of approximately 200 people on the new iPhone. Even Apple employees were unaware of the iPhone idea. The iPhone team operated like a separate start-up company.

The first iPhone was introduced in 2007. Its touchscreen completely eliminated the physical keyboard, and its operating system offered tremendous usability, making it a revolutionary product. iPhone sales exceeded expectations, and Apple received significant investments from major investment funds like BlackRock and Berkshire Hathaway, surpassing valuations of hundreds of billions of dollars.

The iPhone's processor and screen were manufactured by Samsung, while RAM and memory units were provided by Japan's Toshiba and the South Korean company SK Hynix. The assembly was entirely done in China. While this generated enormous profitability for the company and multiplied its value, it was also extremely annoying to American nationalist groups. Apple's preference for Samsung over Intel for processor production was a major blow to the American chip industry. However, the number of those who were annoyed by this situation was not very large at the time.

Today, Chinese companies like Foxconn, Luxshare, and BYD employ more than 5 million people in China thanks to the iPhone manufacturing network, while Apple's employment in America is only about a third of that. Each iPhone that breaks sales records leads to the opening of another factory in China, and currently, there are more than 200 factories in China alone involved in the iPhone manufacturing network, producing half a billion Apple devices annually.

The Dark Side of The Story and the Apple Slavery Accusations

Up to this point, everything has gone so well. Apple taught, Taiwan learned, China produced. But there's a dark side to this story. Nothing in the world happens by chance. The developments here, which are unlikely to be coincidental, prove this. It's likely that American industry didn't move to China by chance either.

Foxconn founder Terry Guo is related to Morris Chang, the founder of TSMC, the world's largest chip manufacturer, a name not so unfamiliar to us. While Foxconn factories in China produce inexpensive Apple products, many workers suffer from harsh working conditions and illnesses. The system at Foxconn factories is structured around dormitories built next to the factory. Instead of going home at night, workers who finish their shifts stay in these dormitories. These people, who earn nothing, have no money to spend, and probably nowhere else to go, spend their lives commuting between the dorms and work.

So much so that many people who can no longer bear this life commit suicide by jumping from buildings. The book "Apple in China" describes how nets were stretched around the buildings at Foxconn factories to prevent people who jumped from dying.

So what do you think the Chinese police are doing in the face of all this? They're roughing up the rebels, making those who want to incite uprisings disappear. The Chinese government doesn't allow unionization; meetings of those who want to form and organize their own unions are raided by the police, and fear is instilled in the rebels. People say that at that time, the Chinese police acted just like the Apple police.

While the Chinese government allowed and even supported the use of its citizens as slaves in exchange for technology transfer and investments provided by Apple, American and other major investors looked at their profits and didn't care about the unfolding drama.

With the Chinese government's repressive regime serving their interests, Western companies have continued to move more and more production facilities to China. In addition to technology companies, European car manufacturers, most notably Volkswagen, have begun opening numerous production plants in China.

Long after these events, in 2022, a Fox News reporter asked Apple CEO Tim Cook: "Do you think it's problematic to do business with the Communist Chinese Party when they suppress human rights?" Cook's silence and failure to answer sparked widespread outrage. He was criticized for complying with the Chinese government's demands instead of protecting workers' rights, and was even labeled as a puppet.

China's Becoming a Superpower: The Rise of Domestic Production

The book "Apple in China" states that Xi Jinping, who served as the governor of Shanghai before becoming the leader of the Chinese Communist Party, held many secret meetings. The content of these closed-door conversations only emerged 5-6 years after he became president. Xi Jinping is known to be a strong critic of Soviet socialism and Lenin's policies. After coming to power in 2012 and gaining strength within the party, he purged the CCP of Leninist and socialist-minded figures. Looking at present-day China, it is clear that it has adopted a style of governance far from socialist or communist, and even closer to capitalism. Many call China's economic model State Capitalism. By purging socialists from the Chinese government, Xi Jinping has left no trace of the old Maoist communist mentality and has succeeded in attracting global capital to China.

Realizing that Apple's growth in China had become irreversible, Xi abandoned his overly tolerant approach towards Apple's management, instead seeking to corner the company more, and he succeeded. Xi demanded that Apple transfer more technology to China and have more Chinese people on its board. In this way, Xi managed to place his own people in Apple's management. Apple helplessly complied with all of Xi's demands. And as American technology and manufacturing power rapidly moved to China, Apple's investors—major American investment firms like BlackRock, Warren Buffett's Berkshire Hathaway, and Vanguard—saw no problem with this.

In the 2010s, Chinese executives who gained experience at Apple gradually began to establish their own companies or move on to newly formed Chinese startups like Huawei, Vivo, and Xiaomi. In China, startups are largely driven by state incentives and representation. These companies are largely government-owned but operate as if they were independent. In this way, Xi has successfully implemented state capitalism, and hundreds of Chinese technology companies and many other companies from different industries have been established.

To illustrate the rapid pace of development in China during the 2010s, an Apple executive said, "If you hadn't visited for six months, it was as if you hadn't been to China at all." From the book Apple in China.

From this point on, every investment Apple, or any company for that matter, makes in China is actually considered a contribution to China's industry. China learns something from each investment and quickly begins to apply this knowledge to its own industry.

Patrick McGee points out that as of 2021, Apple's investments in China were roughly twice the amount the US spent to rebuild post-World War II Europe. Apple is such a large company that its investments are more than enough to revive war-torn nations. It's impossible to even imagine the scale of this money. The size of Apple's investment in China is greater than the total investment made by all American companies in Mexico and Canada combined.

Apple freely funnels American money to China, a dictatorship that America considers an enemy, and no American official has been able to stop it.

In his book, McGee describes the talent Apple sent to China as "the best of the best no government program could ever achieve."

Apple officials initially didn't take Huawei very seriously, which led them to overlook its growth. Subsequent observations revealed that Huawei Mate smartphones were exceptionally good, surpassing Apple phones not only in price but also in features. In 2018, Huawei phones surpassed Apple's sales not only in China but also globally. Huawei's share of Chinese sales increased from 10% a year earlier to 48% in 2018, while Apple's share dropped from 82% to 37%.

In 2018, a very important development occurred that affected the geopolitics of the entire world. The Chinese parliament approved a law that completely abolished the 5+5-year term limit for leaders. Under the old system, Xi's term was supposed to end no later than 2023, but now the way was paved for him to serve as president for life. Xi Jinping was now definitively at the head of China as an absolute dictator, and his country possessed all the technological, economic, and military power. From that point on, nothing in the world could be the same again. And indeed, it wasn't.

The Beginning of the Trade Wars: Apple's Period of Stagnation

In 2019, the Trump administration implemented a series of sanctions banning Huawei from using US-patented chips, citing allegations of data leaks from the US. This was considered the first step in the trade wars the US launched against China. The US administration later banned Huawei phones from using Google services. Unable to use the most advanced TSMC-manufactured 5G chips and deprived of the Android operating system, Huawei's phone sales suffered a major blow.

Apple, knowing that it would be the one to suffer the most from the trade war between the US and China, was the most worried party, while Xi, knowing he would be the real winner, was quite relaxed. He didn't retaliate against the US at all. Amidst all this conflict, in 2022, Tim Cook pledged to invest a full $250 billion in China. Xi, quietly winning in the background, was once again the winner.

The global pandemic of 2020 plunged Apple into another challenging period. For a company that manufactures over 90% of its products in China and sends 50 business-class passengers to China daily, the quarantine period in China was a complete nightmare. The country where Apple executives used to travel freely for business was slowly turning into a dystopia. As soon as they disembarked from the plane, men in white uniforms would appear, forcing them to take PCR tests and refusing entry to those who didn't want to.

Speaking to McGee for his book, a former Apple executive stated that following the US-China tensions, China "went from being the most reliable supplier to the least reliable supplier overnight." The largest company in the US by market capitalization and profitability is dependent on that country to produce over half a billion high-quality devices every year.

The Chinese government has begun to view the sanctions imposed against Huawei and many other Chinese companies as a national security threat and has accelerated its investments in its own chip manufacturing program, Big Fund. An agreement was reached between China's domestic chip manufacturing initiative, YMTC, and Apple to produce RAM chips for Apple phones. Apple decided to invest in YMTC in R&D, technology, and finance.

As the American administration begins to view China's rise and its possession of high-tech chips as a national security threat, Apple's continued investment in technology and finance in China, as if nothing were wrong, has begun to draw strong criticism from Republican politicians.

In 2022, then-Republican senator and current US Secretary of State Marco Rubio stated in an interview with the Financial Times: "Apple is playing with fire; they know that YMTC poses a threat to American national security."

Republican Foreign Affairs Committee chairman Michael McCaul stated, "Apple is helping the CCP achieve its goals by providing YMTC with information and know-how."

Trade wars and the subsequent global pandemic revealed just how dependent America's and the world's largest company is on China. In fact, it showed not only Apple's dependence but also the US's dependence on China, and how it has lost industry to China. Warren Buffett, Apple's first and largest investor, sold a large portion of his Apple shares in 2024. This sale was interpreted as a sign that Buffett, who had been an Apple investor since the first iPhone, had lost confidence in the company.

Apple's Effect on Chinese Automotive

Over the decades, China has become the world's second-largest economy thanks to an influx of money and technology transfer, generating hundreds of billions of dollars in current account surpluses and establishing hundreds of domestic companies with government funding. However, despite all its money and expertise, China has failed to make the expected progress in internal combustion engines and traditional car manufacturing. Here, century-old European companies like Mercedes and Volkswagen possess years of accumulated knowledge and experience, as well as supply chains, making them very difficult to compete in the market.

Chinese car companies established their first automobile ventures by sourcing critical components like engines and transmissions from large European companies, but the cars could only be sold in China and neighboring countries. They were of extremely poor quality and looked ugly, making them unsuitable for the European and American markets.

Electric cars, which began to become widespread in the early 2010s, presented a very different window of opportunity here. Electric cars don't require difficult and complex mechanisms like internal combustion engines and transmissions. Instead, they require highly specialized expertise in areas such as batteries and electric motors. BYD, a Chinese company that grew by supplying batteries for phones, tablets, and computers to Apple and many other brands, also began developing automotive batteries.

CATL, another Chinese battery giant, and BYD started supplying automotive batteries to car companies. European car giants, lagging behind in battery technology, which requires entirely different expertise, purchased electric car batteries from Chinese companies to launch their new vehicles, and their profitability began to decline rapidly.

Chinese automotive startups like BYD, Avatr, and Xiaomi have recruited experienced engineers and designers from European companies by offering them higher salaries, and have improved their expertise in automotive design and aerodynamic engineering.

As the electric and hybrid car market becomes increasingly widespread, China is gaining a larger share while European car companies' sales are rapidly declining. By 2025, China is projected to become the world's largest producer and exporter of automobiles.

Apple's Re-Nationalization Efforts and India Attempts

The supply chain problems experienced during the global pandemic of 2020 accelerated nationalization movements in the US. Government incentives were provided to Apple and other technology companies to move their production to the US. In 2022, Apple CEO Tim Cook announced a $500 billion investment to bring production to the US. However, details such as what exactly this investment would cover and how long it would take were unclear. It seemed more like a political ploy to eyewash, and it was somewhat effective. After the Republican Trump administration came to power in 2025, following a meeting between Apple CEO and Trump, Apple announced a $500 billion investment. However, it was unclear whether this investment was in addition to the previous one or whether it covered the ongoing investments already announced in 2022. Nevertheless, Trump immediately announced it proudly on social media, marketing it as a huge achievement.

Following the investment announced in 2022, Apple produced its first and last iMac Pro model with an Intel processor at the facility established in the US. However, this device was discontinued due to its high cost and rapid technological obsolescence. Currently, Apple has no iPhone manufacturing facilities in the US, except for one for the Mac Mini. In short, attempts to bring manufacturing back to the US are proving unsuccessful.

Incentives given to the Taiwanese chip company TSMC to enable the relocation of chip production to the US allowed them to open a chip foundry in Arizona. However, it was later understood that the chips produced there are sent to Taiwan for advanced packaging and then resend to the US. So, this process is also proceeding as an eyewash. In recent weeks, there have been reports that Apple officials visited Intel factories, but details of this are not yet clear. In summary, Apple is over 90% dependent on Taiwan for chip production.

After China ceased to be a reliable supplier following 2018, Apple began considering manufacturing in India. India was cheaper than China, and its development was similar to China's 20 years ago. Through discussions with Foxconn and other suppliers, they were persuaded to open factories in India.

Following Apple's decision to enter India, Tata Group, a long-established Indian company, also sought to enter the sector by investing in companies within its phone supply network. This is another indication of how Apple is a company that shapes all sectors and industries in every aspect of technology, from manufacturing to supply.

Some iPhone production takes place in India. However, progress is much slower than expected. Contrary to popular belief, India is not as attractive a country for investors as China, with bureaucracy and the difficulty of doing business being noted. Apple's growth in India is said to be only 1/10th the pace of China's growth 10 years ago.

In Patrick McGee's book, an Apple engineer mocks this process by stating, "Even phones made in India were sent to China for testing, where they were disassembled and reassembled." Despite all the efforts of Apple and the US government, by 2025, 75-80% of Apple's total device production are made in China.

Now under pressure from a nationalist administration in America, Apple has decided to remove CEO Tim Cook, who was seen as the main person responsible for moving all of the company's operations and American industry to China. The new CEO will try to gain technological superiority against the much more competitive Chinese companies while simultaneously nationalizing the company under the pressure of a nationalist administration.

Companies That Changed The World: The Demise of Capitalism

When the US defense company General Electric was first founded, it produced electrical household appliances. Following a change in CEO, the company shifted its strategy and entered the finance, energy, and healthcare sectors. With its entry into the defense industry, the technologies General Electric sold became available to all countries. Seeing this as a national security threat, the US administration imposed export controls on the company's sales, causing its shares to lose nearly 80% of their value. Today, General Electric is a critical company that develops the jet engines for the F-35 fighter jets, which the US sells only to its most trusted allies and retains all rights to. It is not allowed to trade freely because it is considered a threat to national security.

Products like computers and phones were initially seen as part of the entertainment industry. Early computer owners were curious, fun-loving individuals. Today, the technologies developed for computers and phones have become the most advanced chips and software in the world. The 3nm transistor chips used in the latest model phones and computers can only be produced by 2-3 companies worldwide, and their sale is completely controlled. States possessing the most advanced chips also have the best radar, imaging, and data analysis capabilities, gaining a significant advantage in wartime.

Technology companies now possess the most critical technologies for the existence of nations, and they will no longer be able to sell them freely. A new era is beginning, or has already begun, where technology companies are completely under state control.

China's state-controlled capitalism model has now surpassed US capitalism, and global capitalists have provided China with this technological expertise and financial resources through Apple and various technology companies. Believing that liberal capitalist economic models are no longer viable in the age of artificial intelligence and technology, global capitalists continue to invest in China, which is successfully implementing the new economic model of the future.

In a new world order where the US will no longer be the sole superpower, and may even collapse completely with the fall of capitalism, they are investing in the future by directing their investments towards China.

In 2023 Xi Jinping in his statement about the coming era used this phrase; "The Ultimate Demise of Capitalism."