Apple is desperately trying to get away from China, but it won’t happen anytime soon

Apple is desperately trying to get away from China, but it won’t happen anytime soon

Getty Images/Getty Images News As geopolitical tensions rise, Apple (NASDAQ:AAPL) and its manufacturing partners have focused on diversifying plants in other countries outside of China. However, given the importance of the world’s largest country by population to the Tim Cook-led company, China is likely to remain a key focus for Apple (AAPL) investors for the next several years, said Bank of America analyst Wamsi Mohan. Mohan, who has a buy recommendation and a price target of $160 per share on Apple (AAPL) noted that the recent COVID-19 lockdowns in Zhengzhou, China, where roughly 50% of iPhone production takes place, have understandably raised concerns among investors. Some estimates have put the COVID related lockdown for Hon Hai had an impact of up to 30% in November, but it is possible that Apple (AAPL) could shift production to other facilities to mitigate any impact, Mohan said. “While the lockdowns pose greater obstacles to production, in our view, other facilities around Shenzhen may be able to compensate unless additional lockdown measures come into effect,” Mohan explained. Mohan noted that delivery times for the iPhone 14 Pro and iPhone 14 Pro Max increased by about a week, reaching 25 days in most countries, including China, Japan, the United Kingdom, Germany, France, and Australia. Meanwhile, apple (AAPL) has increased its manufacturing presence beyond China, especially in India and Vietnam. In 2017, starting with the iPhone SE, Apple (AAPL) manufacturing partners began producing iPhone units in India. And in September, the tech giant confirmed was producing some iPhone 14 units in the second most populous country in the world. The investment firm JP Morgan recently He suggested Apple (AAPL) could move a quarter of its iPhone production to India by 2025 and expected 5% of its iPhone production this year to move to the country. The company has also I ask suppliers to move some of the production of its AirPods and Beats headphones to India. Vietnam has also become a major manufacturing hub for the Apple Watch and some of the production of the company’s popular Mac computers, with Apple (AAPL) suppliers Luxshare Precision Industry and Foxconn recently tested the production of the smart watch in the northern part of the country. Despite these efforts, Mohan noted that a “quick decoupling” from China is not likely anytime soon, given the presence of its manufacturing partners and an increased focus on modular and automated design and assembly. “In our opinion, there needs to be a significantly greater focus on System on Chip and a more modular design. [and] automated assembly, which we don’t expect to happen quickly,” Mohan wrote. Given the enormous importance of Apple (AAPL) financial impact on China, both for itself and third parties, is there a possibility that China could retaliate against the world’s largest company? Not directly, Mohan believes. If anything were to happen, especially in light of the US decision to restrict China’s semiconductor industry, it is possible that local products would receive “favorable subsidies,” which Mohan said could limit Apple’s ability to (AAPL) increase. However, China and Apple (AAPL) are joined at the hip for some time to come. “As Apple continues to be a major employer indirectly in China and has close ties at the city, province and central government levels, we expect Apple to continue to navigate the cross-currents between the US and China as they have done very well. in recent years”, Mohan postulated. This week, Morgan Stanley wondered if the fall of Apple (AAPL) App Store could have bottomed out in September.

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