Apple will take years to diversify from factories in China: Counterpoint

Apple will take years to diversify from factories in China: Counterpoint

Apple Inc. in London, UK. iPhone 14 smartphone on display at the Regent Street store.

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Apple It will take years to diversify from its sugar factories even as the country continues with its zero covid policy which is iPhone production damageAccording to Jeff Fieldhawk of Counterpoint Research.

“It will take years for Apple to diversify,” the research director told CNBC’s “Squawk Box AsiaTuesday, explaining that Apple’s latest iPhones will be made in China for the next few years.

In a statement on Sunday, Apple said it has temporarily curtailed production of the iPhone 14 as its primary iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China, is running at “significantly lower capacity”. Due to covid-19 restrictions,

Apple is diversifying its device assembly process away from China and opening factories in countries south of China, such as India and Vietnam.

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

Apple’s shares are down 20 percent so far this year.

Fieldhawk suggested that the number of employees Apple hired in China could potentially be used as a bargaining chip with the Chinese government, as the iPhone maker was hiring about 200,000 workers at its Zhengzhou factory. Is.

“Apple can say, ‘Hey, we have more employees in China than in the US’ This is very strong and actually helps them avoid any retaliation from China towards the US through tariffs or other decisions ’ Fieldhack said.

Research firm says it will take years for Apple to diversify its production supply chain

As the iPhone 14 models are popular and popular, “we expect most consumers to wait until these devices are available”, he said.

It currently takes 31 days to receive an iPhone 14 Pro after ordering through Apple’s website, compared to the average 2-day lead time for less-expensive iPhone models, JP Morgan analyst Samik Chatterjee said. said in a note on Sunday.

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Counterpoint Research estimates that the disruption in Zhengzhou will result in a 10% reduction in production volume over the next few weeks, mainly for the iPhone 14 Pro and Pro Max models.

Fieldhawk said he is confident that Apple will do everything it can to ship as quickly as possible by shortening timelines in the supply chain or expediting shipping.

“It is time to make adjustments to the affected factories, such as moving some production south, which has some manufacturing of the Pro and Pro Max,” he said.,

Why China shows no sign of backing down from its 'zero-covid' strategy

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