Counterpoint Research says it will take Apple years to diversify away from China

Offer for iPhone 14 smartphones at the Apple Inc Store. Regent Street in London, United Kingdom.

Bloomberg | Bloomberg | Getty Images

apple It will take years to diversify from its Chinese factories, even as the country continues its zero-Covid policy that is hurting iPhone production, according to Jeff Feldhak of Counterpoint Research.

“It will take years for Apple to diversify,” the director of research for CNBC’s “Squawk Box Asia” told CNBC Tuesday, explaining that Apple’s latest iPhones will likely continue to be manufactured in China over the next few years.

In a statement on Sunday, Apple said it had temporarily reduced iPhone 14 production as a major iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China operating at a “significantly reduced capacity” due to Covid-19 restrictions.

Apple is diversifying its hardware assembly away from China and opening factories in southern Chinese countries, such as India and Vietnam.

“Having said that, there are devices that can be assembled in other countries like India, but it’s a very, very small amount,” he said.

Apple shares are down 20% so far this year.

Feldhak suggested that the huge number of workers Apple hires in China could be used as a bargaining chip with the Chinese government, as the iPhone maker hires about 200,000 employees at the Zhengzhou factory.

“Apple can say, ‘Hey, we have more people in China than we have in the US,’ which is very powerful and really helps them avoid any Chinese retaliation against the US through tariffs or other decisions,” Feldhack added.

And because iPhone 14 models are popular and loved, “we expect the vast majority of consumers to wait for these devices to become available,” he said.

It currently takes 31 days to receive an iPhone 14 Pro after placing an order via Apple’s website, said Samik Chatterjee, an analyst at JPMorgan, compared to an average of two days for less expensive iPhone models.

up on the apple

“The good news is that Apple is not completely dependent on hardware. It has a wide range of services and you will see their services evolve over time as they add more services,” said Ray Wang, Founder, Chairman and Principal Analyst. for constellation research.

“The challenge now is if we continue to shut down the Foxconn factory in ZhengzhouAnd the We’re in a little bit of trouble because you can’t get devices to people, but people still want high-end iPhones and don’t necessarily want lower-end phones, he told CNBC’s “Squawk Box Asia” on Tuesday.

Ray Wang talks about why he's upbeat with Apple, and what expected production cuts in China might mean

Counterpoint Research estimates a 10% drop in production volume for the iPhone 14 Pro and Pro Max models primarily over the next two weeks, as a result of the turmoil in Zhengzhou.

Feldhak said he’s confident Apple will do everything it can to ship as much as possible, by reducing timelines in the supply chain or speeding up shipping.

“There is plenty of time to make adjustments to the affected plants, such as moving some production to the south where there is some Pro and Pro Max manufacturing,” he said..

Why is China showing no sign of backing away from its strategy

#Counterpoint #Research #Apple #years #diversify #China

Leave a Comment

Your email address will not be published. Required fields are marked *