Let's review why Apple announced that the company will switch to USB-C chargers for its upcoming iPhone devices and how geopolitics impacts its business model.
Back in November 2022, Apple was valued more than Alphabet, Amazon, and Meta combined.
The iPhone maker's market capitalization stood at $2.307 trillion, while its fellow tech competitors added up to $2.306 trillion.
Wow.
Today, it is best to think of Big Tech as Apple as the biggest planet surrounded by smaller moons.
Apple secured its place as the biggest in Big Tech by securing a grand bargain with Beijing.
Apple's grand bargain with China was twofold - access to factories and consumers.
First came access to factories.
Steve Jobs transferred most of Apple's final assembly to China because, at the time, it was the only country in the world with a vast labor force and an integrated supply-chain network that could scale up production as needed.
Apple's reliance on China for its manufacturing base today is immense.
Counterpoint, a market intelligence group, reports that China is responsible for 95 percent of iPhone production.
Second came access to customers.
In 2009 Apple began marketing the iPhone in China. Then in 2011 came retail outlets in tier-one cities of Beijing, Shanghai, and Hong Kong.
So successful was the launch of these retail outlets that a "creative" Chinese entrepreneur set up a fake Apple store in Kunming, Yunnan province.
The store was such a flawless reproduction that even employees hired as staff believed it was the real deal.
In a 2011 Reuters article on the fake store, the news organization reported it was "complete with the white Apple logo, wooden tables and cheery staff claiming they work for the iPhone maker; the store looks every bit like Apple Stores found all over the world."
Today, Apple maintains at least 50 actual stores in China, making the American company the most profitable tech company operating in China, far succeeding Chinese national champions Alibaba or Tencent.
Apple's empire with China has not gone unnoticed in America.
The cute public affairs message "Designed by Apple in California. Assembled in China" is stamped on the back of iPhones, iPads, and Macs.
The message is a subtle geopolitical message to American consumers, stakeholders, and government officials that the real magic of what makes Apple so magical, the R&D, the software coding, the branding, and marketing, is still happening in California.
But this cute public affairs message can't halt the growing geopolitical realities the company is facing.
Last fall, the company put on hold plans to use memory chips from China's Yangtze Memory Technologies Co. in its products.
Plus, China's COVID-zero restrictions are hurting Apple's ability to assemble a slew of the company's products in China.
The New York Times reports that for much of this year, Apple has also been the focus of a bipartisan intervention in Washington, where alarm over Beijing's military provocations and technology ambitions has upended orthodoxy about free trade.
Apple's rise from near bankruptcy in the 1990s to now being the biggest of Big Tech has closely followed China's economic ascent powered by world-class factories and brand-savvy consumers.
Don't expect this best-of-both-worlds business model, where Apple's products are designed in California, assembled in China, and then sold to the country's expanding middle class, to last for many more years.
Already, Apple is looking to expand assembly for some of its products to India and Vietnam.
Not only is this a good business by adding supply chain resilience, but it is good geopolitics to add more nations (and US allies) to the Apple constellation.
Going forward, geopolitics will only play a more significant role in business. No company can escape this gravitational reality. Not even Apple.
And it is not just the geopolitics of China that matter.
The European Union recently approved legislation that mandates the use of the USB-C port across various consumer electronic devices.
The pedestrian USB-C differs from Apple's preferred design choice, seeing Lightning cables and ports as more civilized.
Apple launched a lobbying effort in Brussels, saying that "strict regulation mandating just one type of connector stifles innovation rather than encouraging it, which in turn will harm consumers in Europe and around the world."
Brussels was unmoved.
Apple reacted by announcing that the company will switch to USB-C chargers for its upcoming iPhone devices.
Apple SVP of World Marketing Greg Joswiak confirmed to Wall Street Journal reporter Joanna Stern that USB-C ports are coming.
"Governments get to do what they're gonna do," Joswiak said at the WSJ Tech Live conference. "Obviously, we'll have to comply. We have no choice."
Greg knows what's up.
Even Apple can't escape geopolitics.
I am a geostrategist and geopolitical business communications advisor.
I founded Caracal, believing that geopolitics is disrupting every industry and sector and that comms pros need actionable insights and ideas to navigate today's interconnected business environment.
Clients rely on Caracal for help navigating today's interconnected business environment with intelligence, strategy, engagement, and education.
Happy to have a chat if it makes sense.
Enjoy the ride + plan accordingly.
-Marc
