"Apple's Suppliers Have So Far Spent $16B To Move From China" - Apple Insider
Portfolio Pulse from Benzinga Newsdesk
Apple's suppliers, including Foxconn, have invested $16 billion since 2018 to diversify manufacturing away from China due to US/China trade tensions, COVID measures, and power supply issues. TD Cowen's research indicates Apple's revenues were impacted by over $30 billion during the pandemic. Reshoring efforts are aimed at reducing future production disruptions, with investments in India, Mexico, the US, and Vietnam. Apple's operating margins may benefit long-term, despite higher near-term costs. iPhone production remains largely in China, but India is emerging as a significant manufacturing hub. Vietnam is becoming a major hub for Mac and iPad production, potentially meeting 40% of US demand. The reshoring process is expected to take years, with challenges in establishing new plants and organizing supply chains.
January 04, 2024 | 4:19 pm
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NEGATIVE IMPACT
The shift of Apple's supply chain investments away from China could have implications for Chinese manufacturing and the broader economy, potentially affecting the performance of the iShares China Large-Cap ETF (FXI).
As Apple and its suppliers invest in manufacturing outside of China, there could be a negative impact on the Chinese manufacturing sector, which may in turn affect the performance of ETFs like FXI that track large-cap Chinese companies.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Apple's efforts to diversify its supply chain away from China could lead to long-term benefits for operating margins despite higher near-term costs. The company's revenues have been significantly impacted by over $30 billion due to production disruptions.
The news of Apple's suppliers investing heavily in reshoring efforts indicates a strategic move to stabilize and potentially enhance Apple's future production capabilities. While the short-term costs are higher, the long-term benefits to operating margins and reduced production risks could positively influence investor sentiment and Apple's stock price.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90