In 2024, American tech giants took clear strategic steps to diversify their supply chains away from over-reliance on China, a move known as "de-chaining." The most prominent of these moves came from Apple, which decided to partially manufacture the iPhone 16 in India for the first time, in addition to making significant investments in chip and semiconductor manufacturing in Mexico. A deeper business analysis of this trend reveals that the electronics industry is undergoing a new geographical realignment that could reshape the global economy for decades to come.
Strategic concerns outweigh prosperity
The primary drivers behind this radical shift are "supply chain resilience" and "strategic risk reduction." The COVID-19 pandemic and escalating geopolitical instability have clearly demonstrated that dependence on a single manufacturing source, however cheap and efficient, represents an existential vulnerability that can cost companies billions of dollars in an instant. Companies like Apple, Amazon, and Google have recognized that the political and environmental risks associated with China—from strategic tensions with Taiwan to human rights issues and strict government censorship—threaten their business continuity and global reputation.
Therefore, these companies have implemented a “China +1” strategy, meaning they maintain their Chinese presence to serve the massive domestic market, while simultaneously building parallel capabilities in other countries to ensure continuity even in crisis scenarios. This means accepting lower profit margins in the short term for long-term strategic security.
India and Mexico: The Golden Winners
From the perspective of India and Mexico, these investments represent a historic opportunity to jump into the electronics value chain. Mexico, thanks to its unique geographic proximity to the United States and its membership in the USMCA, has become an attractive hub for establishing final assembly plants and rapid export operations. India, with its vast pool of qualified engineers and competitive wage costs, is now able to compete with China in high-value, precision processes. This success is prompting neighboring Southeast Asian countries, from Vietnam and Malaysia to Thailand and Indonesia, to move toward the same model, creating a growing regional bloc to compete with China for technology investment. Vietnam has already hosted a massive Apple factory, while Malaysia is vying to host huge data centers.
Deep Structural Challenges
However, this strategy faces significant economic and technological challenges. Production in Mexico and India remains considerably less efficient than that in advanced China, especially when it comes to precision and complexity. China’s workforce, infrastructure, logistics, and supplier ecosystem are far more developed and stable.
Investing in new factories requires considerable time to build reliable power grids, develop roads and ports, and train the local workforce to rigorous quality standards. Companies that rely on sensitive components from China cannot completely eliminate them all at once, placing them in a dilemma between the impossible prospect of “complete decoupling” and the risk of continued dependence.
Chinese Pressure and Responses
From a geopolitical perspective, the Chinese government is exerting considerable pressure to prevent capital flight. Massive financial incentives, regulatory relaxations, and implicit threats of excluding companies from the vast Chinese market are being used as tools to neutralize behavior and maintain economic leverage. China is also accelerating negotiations on regional trade agreements, such as the RCEP, to bolster its alternative economic networks and force companies to choose the “right” side in the great power struggle.
Towards a Multipolar World
The “de-chaining” strategy is not merely a passing political slogan, but an economic reality slowly but steadily taking shape. The world is moving towards more complex and expensive supply chains, but also more resilient and secure ones. Mexico and India are the biggest beneficiaries of this transition, but persistent Chinese pressure and internal challenges may keep them in a state of perpetual development.
The likely end result is a world divided into distinct economic blocs, each with its own technological standards, trade policies, and strategic allies. Electronic goods may become more expensive, but they will be less vulnerable to sudden disruptions. Companies that succeed in building diversified and geographically balanced supply networks will be best positioned to withstand an era of escalating geopolitical uncertainty.
