China is increasing export controls on Apple and other US technology companies, hampering their efforts to expand production in Southeast Asia and India, according to people familiar with the matter who spoke to Nikkei Asia<\/i>.<\/p>\n
The tighter customs controls are linked to dual-use technology export regulations introduced by Beijing in early December. These measures have caused delays of days or even weeks in shipments of manufacturing equipment and supplies to Vietnam and India. Dual-use refers to products or technologies that can be used for both military and commercial applications.<\/p>\n
The technology supply chain has been feeling the heat of heightened Washington-Beijing tensions in recent weeks. On Monday, the Biden administration launched a new round of controls to block China\u2019s access to advanced artificial intelligence chips. This move came just over a month after it added more than 140 Chinese organizations to its trade blacklist in December. In retaliation, China banned exports of gallium, germanium, antimony, and other super hard materials to the US.<\/p>\n
\u201cNot only Apple, but also other American customers\u2019 exports of materials and equipment are affected,\u201d said an executive of an Apple supplier. \u201cCustoms controls are much tighter these days, which is really affecting expansion programs outside China,\u201d he added.<\/p>\n
A person familiar with the situation, who works for another US company, noted, \u201cWhat bothers us even more is that some products and tools are not even on the dual-use list but are being subjected to stricter scrutiny at customs just because they have similar HS codes. Even some speed testing equipment for smartphones, [Chinese customs] can claim that it might be related to military use.\u201d<\/p>\n
Sources said the supply chain began to encounter isolated cases in August last year when Chinese customs held up exports of manufacturing equipment bound for Southeast Asia or India for days without providing a specific reason. The situation has escalated since early December, with Chinese customs officials citing new export controls as justification for stricter inspections, according to two people.<\/p>\n
New routes: India and Southeast Asia<\/b><\/b><\/p>\n
American companies such as Apple, Microsoft, Google, Amazon, HP, and Dell have been aggressively expanding their production capacity in Southeast Asia and India over the past five to six years. Although they have already shifted a certain amount of capacity, these companies still rely on materials and equipment exported from China to build their new production lines outside China.<\/p>\n
\u201cA lot of materials are sourced from China, and we have become accustomed to cheaper equipment made in this country. It takes time and extra costs to find and verify new suppliers,\u201d said a third person involved. \u201cEven if only one piece of equipment is missing, we cannot set up production lines.\u201d<\/p>\n
China has listed more than 160 pages of dual-use products and technologies, including raw materials and metals commonly used in technology supply chains, such as tungsten, graphite, magnesium, and aluminum alloys. The list also includes some equipment for testing and manufacturing, such as analog-to-digital converters that can operate at temperatures ranging from 125\u00b0C to -54\u00b0C, and gyroscope test tools commonly used in the manufacture of electronic devices.<\/p>\n
Gallium and graphite are essential for chipmaking and high-voltage applications such as electric vehicles and power systems. In its 2021 supply chain review, the Biden administration identified these as strategic materials that are alarmingly dependent on Chinese supply.<\/p>\n
Chiu Shih-fang, a technology supply chain analyst, said even Chinese companies face similarly stricter export scrutiny under the new supply chain controls.<\/p>\n
\u201cFrom my observations, Trump\u2019s tariff war threats and the deterioration in the Chinese economy are the main factors behind the increase in Chinese tariff controls,\u201d Chiu told Nikkei Asia<\/i>. \u201cThis is a comprehensive measure to strengthen [China\u2019s] policy to slow down the pace at which companies are moving away from China. If such events continue, it will have an impact on companies\u2019 diversification plans,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
China is increasing export controls on Apple and other US technology companies, hampering their efforts to expand production in Southeast Asia and India, according to people familiar with the matter who spoke to Nikkei Asia. The tighter customs controls are linked to dual-use technology export regulations introduced by Beijing in early December. These measures have […]<\/p>\n","protected":false},"author":1,"featured_media":7229,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[4],"tags":[4880,4878,4872,4874,4879,4877,4876,4875,4873,4881],"class_list":["post-7228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia","tag-apple-supply-chain","tag-biden-chip-controls","tag-china-export-controls","tag-dual-use-technology","tag-gallium-export-ban","tag-india-production","tag-southeast-asia-manufacturing","tag-supply-chain-delays","tag-us-tech-companies","tag-us-china-trade-tensions"],"yoast_head":"\n