Can Apple’s new engineer-CEO master the China balancing act?

On 1 September, one of the world’s most consequential corporate handovers will take place. John Ternus will step into the role of Apple CEO, not into a moment of triumph, but into a geopolitical storm that his predecessor spent a decade carefully navigating.

Apple announced in April that Ternus, its senior vice-president of Hardware Engineering, would succeed Tim Cook as CEO, with Cook transitioning to the role of executive chairman of the board. The succession was described as the product of long-term planning. But no amount of planning fully prepares a hardware engineer, however gifted, for the diplomatic complexity that now defines Apple’s most critical relationship with China. 

Love or avoid China

Apple’s China exposure has two dimensions. On the supply side, China makes its products. On the demand side, China buys them.

Apple’s roughly US$70 billion in annual China revenue depends on consumers who could turn away from the brand if political conditions changed. Meanwhile, Apple’s share of China’s premium smartphone market has fallen as Huawei, Xiaomi and Honor have gained ground.

There is a deeper irony. The sophisticated supplier ecosystem Apple helped develop in China is increasingly serving Chinese competitors, especially Huawei. Industrial capabilities once cultivated to build Apple’s products are now helping produce devices that challenge them.

Diversifying production offers only a partial solution. Apple has expanded assembly in India, but India-made iPhones still rely heavily on Chinese components, equipment and expertise. Decades of manufacturing infrastructure cannot be replicated elsewhere in a few years.

Cook’s diplomatic legacy

Cook’s achievement was therefore more than operational excellence. He became an unusually effective corporate diplomat.

His frequent China visits included meetings with senior officials and appearances at forums such as the China Development Forum. He consistently portrayed Apple not simply as an American company selling products in China, but as a partner contributing to China’s economic and technological development.

Cook understood that personal presence mattered. Meetings with Chinese government officials, technology leaders, suppliers and entrepreneurs were part of a broader effort to build trust and demonstrate commitment.

This relationship became particularly valuable as US-China tensions intensified. Cook learned to operate between Washington and Beijing without allowing Apple to become fully identified with either side. His diplomacy helped preserve access to China’s factories, suppliers, consumers and policymakers.

The Ternus question

Ternus brings very different strengths. Having spent more than two decades at Apple, he has worked on products ranging from computer displays and the iPad to the Mac and iPhone. Since 2021, he has led hardware engineering across Apple’s product portfolio.

He understands how Apple builds things. The question is whether he can manage the political environment in which those things must now be built and sold.

Ternus must therefore address two problems simultaneously: closing Apple’s AI gap and making its AI strategy workable within China’s regulatory environment.

A new division of labour

Cook’s move to executive chairman may provide part of the solution. Apple has indicated that he will continue engaging with policymakers around the world. That is more significant than it sounds.

Cook’s relationships in Beijing, Washington, Brussels and elsewhere represent an asset that cannot simply be transferred to a new CEO. By retaining Cook, Apple is effectively institutionalising his diplomatic role.

This suggests an emerging division of labour. Ternus can concentrate on products, technology, AI and operations, while Cook helps manage the geopolitical relationships surrounding them.

Such an arrangement reflects a new reality for multinational companies. Geopolitics is no longer background noise. For a company as globally integrated as Apple, diplomacy has become part of corporate strategy.

The impossible balance

Ternus nevertheless faces an extraordinarily difficult balancing act. He must seek approval for Apple’s AI services in China without compromising the company’s privacy principles. He must diversify production towards India and Vietnam without alienating Beijing. He must respond to pressure in Washington to reduce dependence on China while preserving access to Chinese suppliers and consumers. At the same time, he must defend Apple’s premium position against Chinese companies whose technological capabilities are rapidly improving.

Above all, he must develop his own relationship with China. He does not necessarily need to imitate Cook. Cook’s strength was personal diplomacy. Ternus’s may be technical credibility. A more product-centred relationship with China, built around manufacturing, research, investment and technological cooperation, could prove equally effective.

But the strategic dilemma cannot be engineered away. The Apple that Ternus inherits is very different from the company Cook inherited in 2011. Apple is now deeply embedded in the world’s most important geopolitical rivalry. America provides its home, technology ecosystem and political identity. China remains central to its manufacturing network and one of its largest consumer markets.

Apple therefore depends on both sides at precisely the moment when those sides increasingly distrust each other.

Ternus’s task is not simply to make better iPhones, Macs or AI products. It is to preserve Apple’s ability to operate across a fractured global economy without being forced to choose completely between its two most important worlds.

That may prove harder than designing any product Apple has ever built. Cook mastered this balancing act through patience, relationships and political instinct. Ternus brings engineering precision and deep product knowledge. As he takes control of one of the world’s most valuable companies, he will have to add another skill to that repertoire — geopolitical diplomacy.

Cook had years to learn it. Ternus may not have that luxury.

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