Apple CEO Tim Cook reveals why companies prefer China for manufacturing; it's not cheap labour

Apple is expanding its production lines in India through its suppliers such as Foxconn, Pegatron, and Tata-owned Wistron as part of its larger efforts to minimise dependence on China – one of the world’s biggest bases for smartphone manufacturing. China is also where Apple has historically produced iPhone models, from the entry-level iPhone SE to the top-notch iPhone Pro Max. According to Apple’s chief executive officer, Tim Cook, that is not because the labour is cheap in China.

The common conception is that labour costs in China are among the world’s lowest -- contributing to the decision to manufacture electronics, including smartphones, by major brands. Apple was also producing all its iPhone models in China before shifting to India. Cook said that has to do more with the sort of skilled labour China offers and less with its cost. In a viral video circulating on social media platforms, Cook can be seen praising China’s skilled labour most companies seek for their manufacturing projects.

“The popular conception is that companies come to China because of low labour costs. I'm not sure what part of China they go to, but the truth is China stopped being the low labour costs country many years ago,” Cook can be heard saying in the video.

In the video, which also received a nod from X owner and the world’s richest person Elon Musk, Cook added, “The reason is because of the skill, the quantity of skill in one location, and the type of skill it is. The tooling skill is very deep here. In the US, you could have a meeting of tooling engineers, and I'm not sure we could fill the room. In China, you could fill multiple football fields. Vocational expertise is very very deep here.”

While it is unclear how old the video is, it has gone viral ahead of the iPhone 16 launch on September 9. A Bloomberg report suggested that there will be four models this time again, and all four are in production in India. While Apple began producing iPhone models in India some years back, they have mostly been the entry-level and standard models. This time Apple may be planning to manufacture the top-level iPhone 16 Pro and iPhone 16 Pro Max in India through its suppliers later this year.