Apple Reportedly Warns Suppliers to Avoid 'Taiwan' Labeling Amid Fears of ‘Trade Barriers'

House Speaker Nancy Pelosi's visit to Taipei despite warnings from China, which considers the island part of its territory, set off a cascade of moves by Beijing, such as unprecedented live-fire drills in six locations around Taiwan and stopping all dialogue with the United States on major issues, from climate change to military relations.

IPhone maker Apple has warned suppliers shipping from Taiwan to ensure that they strictly follow Chinese custom regulations that specifically ban them from saying "Made in Taiwan," Nikkei Asia reported.

In line with a longstanding rule, parts and components made in Taiwan, which has been governed independently since breaking from Mainland China in 1949 but is viewed by Beijing as an inalienable part of the country, have to be labeled as "Taiwan, China" or "Chinese Taipei." Meanwhile, according to suppliers, Taipei has been requesting that its exports be labeled as either originating from "Taiwan" or "Republic of China" - the island's official name.

As tensions escalated over House Speaker Nancy Pelosi's visit to Taiwan, the US technology giant urged suppliers to treat the labeling matter with particular urgency to avoid possible disruptions, sources were cited by the outlet as saying.

According to the report, Pelosi’s visit had “stoked fears of rising trade barriers,” with Apple increasingly nervous about “possible disruptions.”

If import declaration forms use the phrase "Made in Taiwan," such shipments could be held and checked by Chinese customs, sources added, with possible fines for violating the rules reaching up to 4,000 yuan ($592). In a worst-case scenario, such a shipment could be blocked, an insider was cited as saying.

Taiwan is the world's biggest producer of computer chips, with the Taiwan Semiconductor Manufacturing Company's (TSMC) chips used in a wide variety of phones, including the iPhone 13.

The microchips, sold by TSMC to clients all over the world, are used in communication devices, radios, televisions, medical equipment, as well as video games. Apple accounts for about one-fifth of TSMC's annual revenue, with North America being TSMC's largest market. According to the company's website, TSMC produces more than 12,300 products for 535 clients worldwide.

Apple, which is currently gearing up to launch their next generation of iPhones later this year, is highly reliant on Mainland China and Taiwan to make its phone's most crucial component. To date, Apple's iPhone assembler Pegatron Corp was cited as confirming that its Mainland China plant was operating normally.

The latest flare-up of tensions over Taiwan was triggered by House Speaker Nancy Pelosi’s visit to Taipei despite repeated warnings from China that it was a “violation of the one-China principle.”

Pelosi, the highest-ranking US official to visit Taiwan in 25 years, touched down in Taipei on August 2, and was greeted by Foreign Minister Joseph Wu, before China's Ministry of Foreign Affairs slammed the move as a “serious disregard of China's strong opposition.”

Officially, the United States supports mainland China’s claim to the island, dubbed the One-China policy, and does not officially recognize Taiwan's independence.

The controversial high-profile diplomatic visit prompted China to unleash a series of unprecedented live fire drills in six locations around Taiwan on August 4. Beijing has imposed sanctions against two Taiwanese foundations for separatist activities, suspended the export of natural sand to the island and the import of citrus fruits, as well as some types of fish products from Taiwan.

China’s Foreign Ministry said that sanctions would be imposed on Nancy Pelosi and her close relations, as the visit had dealt a serious blow to the "One-China" principle, jeopardizing peace and stability in the Taiwan Strait. China also declared Friday it was stopping all dialogue with the US on major issues ranging from climate change to military relations.