Why Apple can't quit China

For close to two decades, Apple and China have been inextricably linked. The world's most populous country not only accounts for the bulk of Apple's device manufacturing but also a significant portion of its sales.

This year, however, several cracks have started to appear in an otherwise mutually beneficial relationship. Much of the turmoil has been driven by China's "zero-Covid" strategy, with strict lockdowns in major parts of the country earlier this year halting production at several factories — including those of Apple's manufacturing partners Foxconn and Pegatron — and disrupting global supply chains.

Apple (AAPL) CEO Tim Cook warned during the company's last earnings call in April that China's supply chain bottlenecks could cause a hit to its business as high as $8 billion in the subsequent quarter. With the company set to report its next quarterly earnings after the bell on Thursday and China largely sticking to its stringent pandemic measures, the pain may continue.