Taipei, Taiwan – Scenes of mayhem erupted at Apple provider Foxconn’s mega manufacturing facility in China’s Zhengzhou final month as employees, angered by COVID-19 quarantine and unpaid wages, scuffled with safety personnel.

The unprecedented protests at “iPhone City” have induced important delays for the newest iPhone fashions on the yr’s finish – Apple’s busiest gross sales season – placing in danger its 14-quarter progress streak. For Apple, which produces about 90 % of its merchandise in China, there isn’t any simple treatment.

“This can’t be fixed in the short-run, you can’t build iPhone cities that easily in other parts of Asia,” Shehzad Qazi, managing director of consultancy China Beige Book, informed Al Jazeera.

“The supply chains of companies like Apple are incredibly vulnerable because they’re concentrated almost exclusively within China,” Qazi added.

The disaster has underscored the rising prices of working underneath China’s “zero-Covid” technique – which Beijing is scrambling to unwind after almost three years of lockdowns and border controls – and added to the tech big’s urgency to reroute its provide chains.

Apple is accelerating plans to have extra of its new merchandise made elsewhere, particularly in Vietnam and India, the Wall Street Journal reported earlier this month.

In May, Chief Executive Tim Cook, who cultivated pleasant ties with Beijing by agreeing to take away politically delicate apps and retailer Chinese customers’ information inside attain of native authorities, entertained Vietnam Prime Minister Pham Minh Chinh on the Apple Park campus in Cupertino, California.

In September, Apple announced it had begun producing its flagship iPhone 14 in India, the place it has been assembling older fashions since 2017.

Apple didn’t reply to Al Jazeera’s request for remark.

China’s dominant place in Apple’s provide chain has regularly waned in recent times. Until 2019, China was the first location of about 44-47 % of Apple suppliers’ manufacturing websites. China’s share fell to 41 % in 2020 after which 36 % in 2021.

JPMorgan has estimated Apple may make 25 % of all iPhones in India by 2025.

The pattern has raised ideas Apple’s funding in China might have peaked. Yet, regardless of shifting manufacturing, Apple’s deeply entrenched presence within the nation, the place no less than 95 % of all iPhone manufacturing nonetheless occurs, is more likely to make diversification a problem.

“Apple’s not leaving China,” a former Apple government who labored in China informed Al Jazeera on situation of anonymity.

China has been a key supply of the corporate’s profitability, the previous government mentioned, with the nation’s labour market optimised to satisfy the peaks and troughs of Apple’s seasonal manufacturing cycle.

China, as an example, facilitates Apple’s on-demand entry to an unlimited pool of migrant employees, permitting meeting strains to swell to as much as 1 million employees forward of a brand new iPhone launch and shrink to a fraction of that in quieter intervals.

“This doesn’t exist in India and Vietnam probably doesn’t have the population needed for Apple’s scale,” the previous government mentioned.

China’s industrial clusters additionally profit the corporate, he added. Many high suppliers are prepared to work for much less when partnering with Apple, to allow them to study from its provide chain prowess and, in flip, win extra contracts with Chinese manufacturers aiming to reflect Apple’s success.

“Apple’s business model is about forcing suppliers to compete against each other to avoid becoming overly dependent on any single supplier,” the manager mentioned.

Apple appears to be leaning additional into that technique to diffuse provide chain dangers.

Besides diversifying to Vietnam and India, Apple additionally plans to contract a broader cohort of suppliers in China, too. The rationale is that selecting extra winners from the pool of competing companies will cease the emergence of single factors of failure.

Compounding the complications from Beijing’s COVID snafus are Washington’s new restrictions blocking United states companies from doing enterprise with essentially the most revolutionary firms in China’s tech ecosystem.

In October, Apple cancelled its contract with main Chinese reminiscence chipmaker Yangtze Memory Technologies after the agency was blacklisted as a part of US President Joe Biden’s escalating marketing campaign to hobble China’s tech sector amid alleged nationwide safety considerations. Apple had initially deliberate for the Chinese agency to finally provide as much as 40 % of transistors wanted throughout all iPhone fashions.

This leaves Apple with little selection however to deepen its dependency on the US-led provide chain. Apple has since tapped South Korean rival Samsung for the NAND flash reminiscence it had hoped Yangtze would supply, DigiTimes reported final month.

Meanwhile, the corporate is ready to extend its reliance on the Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest producer of superior chips. Apple confirmed this month it might use the Taiwanese chipmaker’s four-nanometre and three-nanometre chipmaking processes for its customized A-series and M-series chips.

Geopolitical tensions over self-ruled Taiwan, which Beijing claims as its personal territory that have to be “reunified” by power if obligatory, add to the sophisticated combine of things influencing Apple’s outlook for China. While Washington doesn’t formally recognise Taipei, Biden has repeatedly indicated he would commit US forces to defend the island within the occasion of a Chinese invasion.

After having fun with years of stability between the US and China, Apple should now navigate the intensifying geopolitical competitors between the world’s two largest economies that features one of the vital harmful flashpoints.

“The possibility that China might invade Taiwan raises alarm bells in Cupertino as well as Washington,” Philip Elmer‑DeWitt, a veteran tech journalist who coated Apple for nearly 4 many years and now runs the net publication Apple 3.0, informed Al Jazeera.

“Notice that both Tim Cook and Joe Biden showed up in Arizona for the start of TSMC’s new US-based factories,” Elmer‑DeWitt added, referring to a latest occasion at which TSMC introduced it might ratchet up its funding for the US-based semiconductor crops from $12bn to $40bn.

Meanwhile, uncertainty stays over precisely how, and the way shortly, China will exit from “zero-Covid”. Though Beijing has lifted a few of its most draconian restrictions in latest weeks, restrictions reminiscent of quarantine for worldwide journey stay, whereas the fast unfold of the virus by the inhabitants has raised the prospect of great disruption and demise.

“Investors need to understand the end of zero-COVID is going to be a process, not a one-shot event,” Qazi mentioned, including that restrictions which have been lifted might be reimposed till sufficient of the inhabitants has been inoculated with mRNA vaccines.

“China has become an increasingly complicated place for foreign companies – especially American companies – to operate,” Qazi mentioned. “This means Western companies and Western countries will feel an outsized impact from China’s social and political policies.”