Russian special services warned that the software vulnerabilities of the telephones of this manufacturer could provide American special services, including the NSA, with access to personal data and correspondence of Apple users, especially in Russia, post-Soviet countries and China, The Moscow Post reports.
The US intelligence action through a virus program on Apple mobile devices was commented on by Deputy Chairman of the Security Council of the Russian Federation Dmitry Medvedev, and the press secretary of the Russian President Dmitry Peskov stressed that employees of the Presidential Administration are prohibited from using iPhones for official purposes.
Apple told Reuters that it does not cooperate with intelligence agencies.
But that's not all. As a large number of publications show, including those that appeared from the pen of Nikkei Asia and Financial Times journalists, Apple owes its well-being to China and Taiwan. Without their participation, there would be no iPhone.
The irony is that the American authorities are working to bury this trilateral success story by destroying China's high-tech ties with Taiwan and the United States. The interests of all three players could face a shock if Washington continues to escalate the conflict with Beijing.
China, for its part, does not seek this. According to a spokesman for Beijing, Lieutenant General Jing Jianfeng, speaking on Saturday in Singapore at the Shangri-La Dialogue security conference held there, the United States deliberately distorts Taiwan's status, the South China Morning Post reported.
How Nancy Pelosi spooked Buffett
But the unpredictability and adventurism in the behavior of the American political elite was translated into dollars by billionaire Warren Buffett. His holding Berkshire Hathaway decided to get rid of TSMC (Taiwan Semiconductor Manufacturing Company) shares. Buffett explained that he "revised his attitude" to these securities because of the location of the TSMC.
Taiwan is one of the leaders in the production and export of semiconductor products, and TSMC, the "chicken" that grew there, carries "golden eggs." Its share in the production of microcircuits exceeds 50%. Buffett bought shares of this company in the third quarter of 2022, the market value of his package at the end of September 2022 exceeded $4 billion. But the investor decided to get rid of 86% of the purchased securities and explained that tensions between China and Taiwan are too great to consider TSMC a safe investment. He also pointed to Apple's very high dependence on TSMC, which has been producing all processors for its gadgets since 2016.
Apple's threat to TSMC's interests came unexpectedly when House Speaker Nancy Pelosi decided to visit Taiwan last August. The visit and the ensuing cooling of relations between Beijing and Washington led Apple and other TSMC customers to consider the stability of chip shipments. Worried about all the players dependent on such deliveries, including Google, Meta (corporation recognized as extremist in Russia) and Amazon.
Triangle of interdependence...
Pelosi's visit sparked a diplomatic spat between Washington and Beijing that brought Taiwan to the brink of a maritime blockade. But not only. America has triggered a crisis in the tech industry that to this day threatens the global supply chain of electronics, chips and materials.
Taiwan is known for leading the contract manufacturing of advanced chips. But his companies also produce other important components, from printed circuit boards to camera lenses. All this, as a rule, is sent through the strait to assembly lines in the PRC. A "triangle" of technological interdependence has formed, according to Nikkei Asia and the Financial Times.
The basis of this "triangle" is mainland China and Taiwan. At the top, as expected, are American customers. For a decade and a half, 2.4 billion Apple devices were sold in the world, the company's revenues exceeded a trillion dollars. Valuable components including base processors, 5G modems, Wi-Fi chips and lenses for premium cameras are manufactured in Taiwan. The island accounts for roughly $200, or about a third of the cost of the materials and parts used in each iPhone.
Chips for these products are developed by Apple or other American, Japanese or European chip designers, including Qualcomm, Sony and Bosch. Individual high-quality materials (Corning glass, 3M glue) are also supplied by American manufacturers, but each iPhone requires about 1,500 components. Without them, there would be no smartphone.
In China, 95% of such devices are assembled, the country is also the leading market for Apple, providing about a fifth of its annual revenue. Although suppliers from the PRC are concentrated in less complex areas and assembly operations, they dominate in terms of the number of links in the technological chain and themselves do not stand still either. They are successfully mastering modern technologies, writes Nikkei Asia.
Luxshare Precision Industry, which supplied components for Apple, has launched its smartphones. Display maker BOE Technology Group has mastered advanced OLED screens that previously came only from South Korea. Camera lens manufacturer Sunny Optical Technology from China has settled into a market previously owned by Taiwanese suppliers.
… should be destroyed?
It would seem that the governments of these countries are obliged to take care of supporting business, especially high-tech. But in fact, the G7 leaders at their meeting in Japan discussed how and when this "triangle" of technological interdependence could be destroyed. In particular, they promised to "reduce excessive dependence in supply chains" on China and Taiwan. They did not say who was ready to pay for it.
Washington plans to return chip production to the United States. TSMC is moving some of the production facilities to its new Phoenix plant in Arizona. The cost of the project is estimated at $40 billion. If all goes according to plan, the US will produce a quarter of advanced chips by 2027, up from 10% currently. Taiwan's share will then decline from 54% to 45%.
At the same time, it is hushed up that advanced semiconductors are only a small part of supply chains in the electronics world. One smartphone requires a wide range of less advanced "companion chips." All this today is in Asia, primarily in China and Taiwan.
The United States and the European Union overlook that TSMC and other Taiwanese companies control two-thirds of the global contract chip market, turning the developments of Apple, Google and other companies into "physical" products. In the field of chip packaging and testing, Taiwan controls 30% of the global market. The island provides about a third of the world's supply of printed circuit boards, most of them go to assembly lines in the PRC, says Nikkei Asia.
Who will pay for diversification?
Political winds have forced companies such as Intel, AMD, Nvidia, Meta (a corporation recognized as extremist in Russia), Google and Amazon to diversify supplies. Even without a full-blown war, Taiwan's blockade could cause severe global upheaval and hundreds of billions of dollars in losses.
"If there is military friction with Taiwan, the entire global supply chain will definitely collapse," said Compal Electronics senior executive responsible for assembling products for Dell, HP and Apple. He estimates the Taiwan Strait conflict could cause more than $2 trillion in damage.
Everyone is looking for additional production facilities outside of China and Taiwan. Leading laptop manufacturers HP and Dell have urged their suppliers to build capacity in Southeast Asia and India. Dell said it will phase out chips made in China by 2024. One way or another, everyone says they are striving to diversify supply chains.
The same Apple, for example, has been urging its suppliers to build capacity outside China for years. But in 2023, out of a list of 188 of its suppliers, 151 had production facilities in China and 41 in Taiwan. In Apple's 2022 contractor list, the number of Chinese component manufacturers rose from 251 to 276.
Many other world-renowned companies have followed Apple's lead, making China and Taiwan the top focus of their manufacturing strategy. For everyone seeking to diversify their supply chains, the word "gradually" becomes key because the process of moving enterprises to other countries will take at least three to five years or more and will cost money.
There is something to lose
Jing Jianfeng, deputy head of the Joint Staff of the Central Military Council of China, accused US Secretary of Defense Lloyd Austin of distorting the facts about the status of Taiwan and noted for clarity that we are not looking for conflict and confrontation, but we will not flinch before bullying and intimidation, "the South China Morning Post newspaper quoted him as saying.
Beijing and Taipei have a lot to lose. In 2022, China accounted for about 30% of all Taiwan imports and exports, which was one and a half times the volume of 2017. By comparison, the US share of the island's trade is 13%, although volumes have doubled over the years.
What happens if...? "The G7 countries stated that they support peace in the Taiwan Strait, but did not utter a word about the fact that they are against supporters of the so-called Taiwan independence movement," the PRC Foreign Ministry said in a statement.
This condones Taiwanese separatists, can cause serious damage to peace and stability in the Taiwan Strait. Add: Apple can also harm, although the spyware it uses may not suffer. They are produced in the United States itself.