• China's "zero COVID" policy has hit Apple's supply chain, causing delays on iPhone production.

• Apple plans to expand production into India and Vietnam and eventually use a factory in Arizona.

• But relocating an entire supply chain is expensive, and it could cut into Apple's enormous margins.

When Apple's manufacturing hub in Zhengzhou, China, temporarily shut down in November, it was clear Apple needed to rethink its supply chain.

The shutdown, which Bloomberg reported could result in a shortage of 6 million iPhone 14 Pro and Pro Max units, means wait times are now stretching past the holiday season. On Saturday, The Wall Street Journal reported Apple was accelerating the expansion of its manufacturing base outside China.

But any shift out of China won't be quick, with over 35% of the factories supplying Apple located in China. Some estimates say it will take until the end of the decade to move 10% of Apple's iPhone manufacturing out of the country. Moreover, it's unclear what would happen to Apple's enormous hardware margins if it attempted to leave China.

Breaking up is hard to do

While Apple sources its microchips from several factories in India, Vietnam, and China, the largest supplier is the Chinese Foxconn factory that shut down after protests over China's "zero COVID" policy.

Apple began making plans to move more of its production outside China in May after experiencing a bout of supply-chain delays after shutdowns over the zero-COVID policy and protests surrounding it.

Dan Ives, a Wedbush analyst, said in an analyst note that the zero-COVID policy was the last straw for the company.

"The reality is that Apple is extremely limited in their options for the holiday season and are at the mercy of China's zero-COVID policy," Ives said. "Now it's the painful waiting game to see what ramped production looks like over the next week for Apple to ease some iPhone shortages that are building globally."

But any move will take time. Ives and Wedbush estimated it would take until 2025 or 2026 for 50% of Apple's iPhone production to move to India and Vietnam if Apple moved "aggressively."