Apple's latest smartphone could be delayed amid China's crackdown on labeling with any reference to Taiwan
US House Speaker Nancy Pelosi's (D-California) controversial visit to Taiwan may have negative ramifications for America's most valuable company, as new labeling restrictions imposed by Beijing could delay the introduction of Apple's latest smartphone, the iPhone 14. The possible delay was first reported by the website GSMArena.
It turns out that iPhones are made with chips supplied by Taiwanese semiconductor giant TSMC, and many of the handsets are assembled in China by another Taiwanese partner, Pegatron. In the wake of Pelosi's visit to Taipei last week, the Chinese Communist Party (CCP) has reportedly vowed to begin enforcing a ban on any references to Taiwan or the ROC (Republic of China) on products entering the mainland.
According to a report on Friday by Japan's Nikkei press agency, shipments of parts to Pegatron's plant in Suzhou, west of Shanghai, were disrupted as they were checked for labeling violations. Pegatron denied that production had been affected, but Apple has directed its suppliers to strictly comply with the newly enforced customs requirements and avoid labeling products as 'made in Taiwan' or 'made in ROC', Nikkei said.
Violations could cause shipments to be seized by the Chinese authorities, or at least held up in customs and delayed. Sending them back for relabeling would also cause delays. Under regulations that were first announced in 2015, China requires products from Taiwan to be labeled 'made in Taiwan, China' or 'Chinese Taipei'.
Taiwan has governed itself since 1949, when nationalist forces fled to the island after being defeated by the newly declared People's Republic of China. The CCP has long objected to Taiwan calling itself the Republic of China, viewing it as Chinese sovereign territory.
Beijing, which strongly condemned Pelosi's visit as undermining China's sovereignty, reacted by severing military and climate ties with Washington.
The stakes would be high if the rising tensions lead to tighter trade restrictions. Pegatron's Suzhou complex makes products for such major US corporations as Microsoft and Tesla. Apple, Microsoft and Tesla rank as the largest, second-largest and fifth-largest US companies by market value.
It likely doesn't help that top Taiwanese executives, including Pegatron Vice Chairman Jason Chen and TSMC founder Morris Chang, were photographed meeting with Pelosi at a lunch hosted by Taiwan's president, Tsai Ing-wen.
Apple has taken the unusual step of diversifying the production of its iPhone 14, according to analyst Kuo Ming-chi of TF International Securities. A Foxconn plant in India aims to start shipping the new iPhones at around the same time the handsets assembled in China start rolling out, in the second half of this year, Kuo said on Friday.