Is decoupling inevitable?

China is reviewing whether or not Intel poses a risk to national security, and officials are already saying that it does indeed pose a significant threat. This is a pretext for banning Intel from China. China accounts for 27% of Intel’s sales.

If this tit-for-tat game continues US manufacturers will lose access to China’s market. But this has been China’s playbook all along. If they have alternative products produced in locally, they will certainly squeeze out US manufacturers possibly even trying to put them out of business. Apple is one company that may defy expectations for a while but Apple has a big footprint in China supporting over 200,000 jobs at its Foxconn Zhengzhou factory alone. Additionally, Apple has stated that it supports as many as 5 million more jobs in China when considering suppliers, R&D centers, local companies, and developers. So, perhaps Apple has enough influence in China to stay off the chopping block for a while, but it will have to face the music sooner or later.

If we keep this up, US markets will be closed to China and vice-versa. China will attempt to produce everything it needs locally while the US relies on “friend-shoring” and more domestic manufacturing. Decoupling is inevitable it seems.