The escalating trade war between the US and China has forced companies to make large operations and production-related decisions. Only recently reports suggest that Apple is exploring the idea of moving out a considerable chunk of its production from China to other South East Asian countries.
A report from the Nikkei Asian Review said that Apple, one of the biggest smartphone manufacturers and distributors in the world, has asked its suppliers to look into the cost of moving out production from China. The report also revealed that the primary motivator of such a massive move is the growing tension between the Trump administration and the Chinese government over the unresolved trade war. It is also possible, the report cited, that even if a resolution is eventually coming up with between Washington and Beijing, the company may not turn back on its plans since Apple sees heightened risks from its reliance on Chinese manufacturing.
Apple declined to comment regarding the Nikkei Asian report.
Wedbush analyst Daniel Ives said that “in a best-case scenario,” Apple would likely be able to shift 5% to 7% of its iPhone production to India within 12 to 18 months.
“Moving 15% of its iPhone production from China to other regions (India and Vietnam would be top candidates) would take at least two to three years in our opinion given the complexity and logistics involved in such a gargantuan endeavor and clearly have its share of risks (e.g., supply chain disruption, higher costs),” he wrote.
So far this year, Apple shares are performing well with a 29% growth since January. The Dow Jones Industrial Average DJIA, +0.23% has climbed 14% in that time.
Meanwhile, reports also reveal that Apple stocks are no longer the most preferred stocks among millennials in the Robinhood platform. Instead, the new “cool” stock are cannabis shares.
