For Apple, it’s been a long week — and it’s only Tuesday

It rains. It pours. Apple has lost its top AI models exec to Meta on the same day the Trump Administration slaps a 36% tax on Macs made in Thailand and US trade advisor Peter Navarro lashes out at Apple CEO Tim Cook. 

Apple has been struggling to figure out how to transition its supply chain to other nations for years. We all know how complex that task is, and there are literally dozens of reasons it makes sense to keep some manufacturing outside the US, focusing energy domestically on advanced next-generation process development to keep America at the forefront of tech industry achievement.

Tim Cook keeps asking for time

Navarro doesn’t seem to want to listen to those arguments or those challenges, accusing Cook of continually “asking for more time in order to move his factories out of China.” 

The Trump advisor thinks that with new advanced manufacturing techniques and artificial intelligence, Apple should be able to make iPhones in the US — though doing so would likely drive the cost of the devices to $3,500 each, damaging Apple’s business for little benefit in terms of automated factory jobs. Apple meanwhile has pledged to spend over $500 billion in the US on advanced chip manufacturing and other next-generation tasks.

It’s not just iPhones. 

Now, Thailand’s in Trump’s sights

Apple has diversified some Mac production to Thailand, and now the administration has slapped a 36% tariff on imports from that country. That tax is going to make Macs and Apple Watches more expensive to US consumers, and Apple may be forced to swallow the higher costs to the detriment of profit margins. 

What makes this worse is the changing goal posts in play. Apple has evidently listened to calls to diversify manufacturing outside China; it set up its first Apple Watch manufacturing facility in Thailand in 2022 and has been engaged in — and spent billions on doing — a switch to India for iPhone.

The US government now appears to have changed the target somewhat and insists not only on moving outside of China, but of moving production to the US. That’s an ambition likely to be only partially possible at best, given lack of key skills, raw materials, components, and infrastructure. Apple management will know this, and will no doubt be saddened at the lack of pragmatism.

Meta goes for broke on AI

Apple’s hardware business will suffer as a result. It looks like its software and services arm will feel the pinch, as well. The company’s long-term problems with Apple Intelligence just won’t go away, and as we hear speculation that some of the company’s key AI developers are unhappy that Apple may move to adopt third-party services; the leader of its Foundation Models group, Ruoming Pang, is leaving, poached by big money from Meta. He will join Meta’s own AI development efforts. 

There is also speculation that others among Apple’s AI staff might also plan to quit. Pang’s former deputy Tom Gunter also left Apple recently.

A former Google AI lead, Pang was reportedly in charge of the AI foundational models team at Apple, where he supervised more than 100 engineers to build AI models for Siri and other on-device features. The team’s work was pivotal to Apple’s AI strategy, Bloomberg reported — though it seems worth noting the results of that labor appear to be running a little late.

Pang may not be the only unhappy AI researcher in Cupertino. The company also reportedly nearly lost the entire team behind its open-source machine learning framework, MLX. Engineers apparently threatened to quit, forcing Apple to come up with reasons to remain.

A long week

What’s driving dissatisfaction seems to be lowered morale across the team following its failure to ship new Apple Intelligence features on time. Apple’s decision to look to other companies to plug the gap has also affected staff mood, with many already frustrated at Apple’s slow and measured approach to AI deployment. Developers want to move fast and break things, which seems a bad idea when curating an ecosystem of billions of devices. 

Any one of these setbacks would be a problem for any company. But to achieve all of them this week, by Tuesday, really seems to be a shortcut to making this a tough week at Apple HQ.

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