Executive Summary
Several U.S. technology companies have played important roles in supporting Ukraine’s military to combat Russia’s full-scale invasion of the country and in helping the Ukrainian government maintain critical functions. Companies like Maxar and Planet Labs have provided intelligence, surveillance, and reconnaissance (ISR) capabilities, and established defense contractors like Palantir have informed targeting, while tech giants like Amazon and Microsoft have contributed to safeguarding government data and securing software services. Overall, their assistance has supported the resilience of the Ukrainian government and military during the ongoing conflict.
U.S. tech companies’ assistance in the war in Ukraine has provoked questions about how they might act in a hypothetical Taiwan contingency. The respective Russia-Ukraine and China-Taiwan situations are, however, different in many substantive ways. For one, while most of the U.S. tech companies assisting Ukraine had limited economic stakes in Russia, their relationships with China are much deeper and more complicated.
In this report, we seek to trace and analyze the complex financial and economic linkages that leading U.S. tech companies that supported Ukraine have to China. Business considerations are certainly not the only variables influencing boardroom decisions amid major geopolitical events; company reputation, corporate responsibility, value alignment, and public pressure are all important drivers of business behavior as well. That said, understanding the financial stakes U.S. tech companies have in China can help provide insights into the incentives and pressures these companies might face in a potential contingency related to Taiwan. Although this research is not without limitations, we hope it can provide analysts and policymakers with valuable context for evaluating, if not anticipating, the decisions and behaviors of some of the major U.S. tech companies in a variety of crisis scenarios involving China.
We focus on the following 18 companies based on their involvement in Ukraine: Amazon, Apple, Capella Space, Cisco, Clearview AI, Cloudflare, Fortem Technologies, Google, Mandiant, Maxar, Microsoft, Oracle, Palantir, Planet Labs, Primer, Recorded Future, SpaceX, and Tesla.
We rely on data from fDi Markets, Crunchbase, and myriad reputable open sources to estimate the type and scale of economic and financial linkages between these U.S. companies and China. We focus on indicators such as overall revenue from business in China, greenfield foreign direct investment (FDI) projects, supply chains and supplier information, data and cloud computing centers, and venture capital and private equity investments in Chinese companies. We also analyze factors such as the number of company employees or the type of research and development (R&D) operations that these U.S. tech companies have in China.
With these indicators in mind, we define vulnerable companies as those that could suffer potential economic costs including lost revenue, production capacity, sunk costs from FDI, curtailed research output, and loss of access to China’s technology innovation ecosystem and labor pool. Relatedly, when discussing (actual and potential) Chinese coercion, we are referring to the use of threats or negative actions to force a change in a corporation’s behavior. The limitations of this research design and our data sources are discussed in detail in the methodology section of this report.
We find that of the 18 U.S. technology companies that provided assistance to Ukraine, none had significant economic or financial linkages to Russia across the variables we examined. However, the situation with regard to China is different. While ten of these 18 companies have little or no linkages with the country, four companies have extensive economic linkages with China.1 Tesla, Apple, Amazon, and Microsoft draw revenue from selling products in China, have made greenfield foreign direct investments and venture capital investments in Chinese companies, operate data or R&D centers, and/or maintain supply chains in the country. Four other companies, Cloudflare, Google, Oracle, and Cisco, have notable, but less extensive, ties to China.
The linkages between these eight U.S. tech companies and China vary in type and depth. Some companies extensively rely on Chinese factories for manufacturing products, while others simply run local data and cloud computing centers. Specifically, we find that:
- Compared to the other companies reviewed in this report, Apple and Tesla have the most extensive economic and financial ties to China, based on indicators such as revenue, supply chains, and greenfield FDI.
- Product sales in China accounted for about 20 percent of Tesla’s and Apple’s sales revenue in 2022.
- 80 percent of Apple’s suppliers operate in China and 17 percent of Tesla’s suppliers are located in the country, making these two companies highly dependent on China-based factories and supply networks for the manufacturing of their products.
- 95 percent of Apple’s iPhones, AirPods, Macs, and iPads are assembled in China, while Tesla’s Shanghai Gigafactory produces over 50 percent of the company’s electric vehicles.
- Tesla and Apple’s greenfield FDI capital expenditures in China account for 32 percent and 19 percent of their respective global totals.
- Amazon and Microsoft also have notable linkages to the Chinese economy and R&D ecosystem, albeit to a lesser extent than Tesla and Apple.
- Amazon maintains robust supply chains in China, as 32 percent of its total suppliers are located in the country.
- Amazon’s China-based R&D labs conduct research on natural language processing, machine learning, and deep learning, among other advanced computer and data science-related topics.
- Microsoft has extensive R&D operations and involvement in China’s technology innovation ecosystem.
- China-based Microsoft Research Asia, for instance, has produced over 9 percent of the company’s total conference research papers in fields such as artificial intelligence and computer vision.
- By contrast, Cloudflare, Google, Cisco, and Oracle maintain less robust linkages to China, though they still draw revenue from China and/or have greenfield FDI and PE/VC investment, R&D centers, and data and cloud computing centers in the country.
To be clear, we do not claim that these linkages, entanglements, and vulnerabilities will definitely influence corporate decision-making and actions in the event of a Taiwan crisis. Indeed, it is impossible to project how these companies may react. Moreover, while we refrain from speculating about the nature of a potential Taiwan-related contingency, it is likely that the type of scenario itself—including its severity and scope—would heavily shape company responses. That said, our analysis suggests that the decision to support Taiwanese (and/or U.S.) efforts may be more complicated for some of the U.S. tech companies that provided support to Ukraine than for others.
In particular, we find that, due to their reliance on China for revenue and manufacturing, Apple and Tesla, and to a lesser extent, Amazon, may be especially vulnerable to Chinese coercion or economic pressure in a potential Taiwan crisis. Due to its investments in R&D and entanglements with China’s innovation ecosystem, Microsoft may also be particularly vulnerable should it be forced to curtail its activities in China or, in a more extreme scenario, withdraw from the country.
That said, China may also be vulnerable should these companies wind down their local operations. For example, the departure of Apple, Tesla, and Amazon could lead to job losses and harm the business prospects of their suppliers. Moreover, as these companies, as well as Microsoft, Google, and Cisco, conduct R&D activities in China, Beijing may have difficulty accessing global networks of science and technology experts should the firms wind down their local operations.
This suggests that in a potential Taiwan crisis, the support of U.S. technology companies should not be taken for granted, as they will have to make complex decisions and could suffer substantial costs. The United States and its allies should temper their expectations that all of the U.S. technology companies that supported Ukraine’s war effort will similarly back the United States, Taiwan, and like-minded countries in a potential contingency. In particular, Taipei should not anticipate automatic support from those U.S. technology companies that have more substantial economic and financial ties to China. U.S. defense planners, meanwhile, would benefit from closer coordination and engagement with those U.S. tech companies to gauge their position and inform planning in case of a Taiwan contingency.