NLPC Files New SEC Proxy Memo as Apple Urges Shareholders to Reject China Audit Proposal

The shareholder group National Legal and Policy Center (NLPC) has submitted a new filing with the SEC, urging investors to back a proposed "China Entanglement Audit" despite Apple's recent recommendation that shareholders vote against the measure. The move escalates a long-running debate over Apple's strategic dependence on China and the transparency of its risk disclosures.

Apple's board has formally opposed the proposal, stating in its proxy statement that "the requested report is unnecessary given we already provide extensive information on our international operations." The company further argued that the proposal "is highly prescriptive and attempts to inappropriately restrict Apple’s ability to manage its own ordinary business operations and business strategies." This position reflects Apple's consistent stance that its existing disclosures—found in annual 10-K filings and quarterly earnings calls—sufficiently address geopolitical and supply-chain risks.

The NLPC's counter-filing challenges this assertion directly. In its new proxy memo, the organization contends that Apple's current reporting lacks the granularity needed for investors to properly assess exposure. "For over a decade, Apple has constructed a business model that links to the People’s Republic of China (PRC)," the document states. "This entanglement is no longer merely an operational choice; It has become an existential vulnerability. While the Company’s Board of Directors argues in its opposition statement that current disclosures are 'extensive,' these disclosures fail to provide the quantified, scenario-based financial analysis required for shareholders to assess the resilience of their investment in an increasingly volatile geopolitical climate."

This argument hinges on a key distinction between general risk factors and specific, quantified exposure. While Apple's 10-K mentions risks related to "geopolitical tensions, trade restrictions, and supply chain disruptions," the NLPC is pushing for a formal audit that would require Apple to model specific scenarios—such as the impact of potential sanctions, export controls, or forced decoupling—and assign financial values to those risks. This type of analysis would go beyond qualitative statements and provide shareholders with concrete data points for evaluating long-term investment stability.

The proposal is not without precedent. In 2023, the NLPC supported a similar "Communist China Audit" resolution focused on Apple's exposure to geopolitical, supply-chain, and human-rights risks linked to China. That earlier effort failed, but it set the stage for the current, more narrowly defined "China Entanglement Audit." The group's persistence underscores a growing concern among certain investors about concentration risk. Apple's manufacturing and assembly operations remain heavily dependent on Chinese facilities, even as the company has expanded production in India and Vietnam. According to supply chain analysts, approximately 90% of iPhone assembly still occurs in China, with key suppliers like Foxconn and Luxshare operating primarily within the region.

The timing of this renewed push is significant. The shareholder vote will take place at Apple's virtual annual meeting on February 24, 2026. This comes amid ongoing geopolitical tensions and continued U.S.-China trade friction, which has already prompted companies across the tech sector to reassess their supply chain strategies. For Apple, the stakes are particularly high given its massive revenue exposure to the Chinese market—both as a manufacturing hub and as a consumer base. In its most recent fiscal year, Greater China accounted for roughly 20% of Apple's total revenue, making it the company's second-largest market after the Americas.

From a developer perspective, this shareholder activism has tangible implications for iOS and Android development ecosystems. Apple's manufacturing and supply chain decisions directly affect hardware availability, component costs, and product release timelines—all of which influence development priorities and platform investment. If Apple were to accelerate its diversification away from China due to shareholder pressure or geopolitical events, developers could face disruptions in device availability, changes in component specifications, or shifts in regional market dynamics. For cross-platform developers, such changes might affect testing device availability, regional app store policies, and even the performance characteristics of apps across different hardware configurations.

The NLPC's argument also touches on broader questions about corporate transparency in the tech sector. As companies like Apple, Google, and Microsoft navigate complex global supply chains, investors are increasingly demanding more detailed reporting on geopolitical risks. This trend reflects a shift from traditional financial metrics toward more holistic risk assessment that includes environmental, social, and governance (ESG) factors—though in this case, the focus is squarely on geopolitical and supply-chain exposure.

For developers working on both iOS and Android platforms, these corporate-level debates have practical consequences. Apple's manufacturing strategy influences the availability and cost of development hardware, from iPhones to Macs. Changes in China-related policies could affect the rollout of new features, the timing of software updates, or even the accessibility of certain development tools and resources. Android developers face similar considerations, as many hardware manufacturers in the Android ecosystem also rely heavily on Chinese supply chains.

The upcoming shareholder vote will serve as a test case for how much influence activist investors can wield over Apple's strategic disclosures. If the proposal passes, Apple would be required to produce a detailed audit of its China entanglement risks—a report that could potentially influence the company's future manufacturing and supply chain decisions. If it fails, it may signal continued shareholder confidence in Apple's existing disclosure practices, though the NLPC and similar groups are likely to continue pushing for greater transparency.

As the February 24 vote approaches, both institutional and retail investors will need to weigh Apple's arguments about operational flexibility against the NLPC's call for more granular risk disclosure. For developers and tech professionals, the outcome may provide insight into how corporate governance decisions could shape the future of platform development and hardware availability in an increasingly fragmented global tech landscape.