Apple iPhone assembly in India won’t cushion China tariffs: Moffett

Leading analyst Craig Moffett has cast doubt on the feasibility of Apple’s reported plans to shift iPhone production from China to India. In a memo to clients following a report by the Financial Times, Moffett questioned how such a move would effectively reduce costs associated with tariffs, as the iPhone components would still be manufactured in China.

Moffett, a highly regarded analyst ranked multiple times by Institutional Investor, raised concerns about the challenges of diversifying to India, noting that Apple’s supply chain would remain anchored in China and could face resistance in India. He highlighted that while moving assembly to India may help mitigate some tariff-related costs, it may not address the larger issue of potential sales impact.

In his communication to clients, Moffett emphasized the complexities of navigating a global trade war, emphasizing that the shift to India might only offer partial relief from the challenges posed by tariffs. He also revised his price target for Apple stock to $141 from $184 per share, representing a significant decrease and making it the lowest target on Wall Street according to FactSet.

Despite his bearish stance on Apple, Moffett acknowledged the company’s strong fundamentals, including a solid balance sheet and a loyal consumer base. However, he expressed concerns about the impact of tariffs on product pricing and consumer demand, as well as the lack of support from carriers to offset tariff costs.

Moffett highlighted the potential backlash against Apple in China due to U.S. tariffs, which could further erode iPhone sales in the region. He pointed out that competitors like Huawei and Vivo are gaining market share in China at Apple’s expense.

While Apple’s stock saw a positive performance last week, rising over 6%, Moffett’s pessimistic outlook on the company’s prospects underscores the challenges it faces in the current economic environment. With Apple’s quarterly earnings report scheduled for release next week, investors will be closely watching for any updates on the company’s strategy to navigate the ongoing trade tensions and their impact on its business.

In conclusion, Moffett’s analysis raises important questions about Apple’s plans to shift production to India and the broader implications of the global trade environment on the tech giant’s future performance. Investors will be closely monitoring how Apple manages these challenges in the coming months.