Apple looks to Southeast Asia, India as hedge against China difficulties

Yahoo Finance ^ | 04/25/2024 | Daniel Howley,·Technology Editor

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Apple (AAPL) CEO Tim Cook toured Southeast Asia last week, visiting Vietnam, Indonesia, and Singapore, as part of a multiday trip geared toward reducing Apple’s reliance on China as its central manufacturing hub.

And while Apple isn’t looking to abandon China — Cook spent a number of days in the country just last month — the company is hedging against the potential for future manufacturing roadblocks in the region.

At the same time, the company is slowly setting its sights on India as its next major growth opportunity now that China has become a more mature smartphone market.

“Apple is in the beginning stages of a decade[-long] transition away from reliance on China and diversify that to other countries in Southeast Asia on both the manufacturing front and the demand front,” Deepwater Asset Management managing partner Gene Munster told Yahoo Finance.

But reducing Apple’s dependence on China for building its devices and growing its market share could take some time.

Manufacturing Growth Beyond China

China accounts for a disproportionate amount of Apple’s supply chain partners such as Foxconn and Pegatron. That concentration of manufacturing capacity in one area proved especially damaging during the pandemic when China forced factories to shut down, limiting Apple’s ability to build and ship devices.

Once capacity came back online, Apple was able to meet consumer demand again. But the fact that a factory closure had such an impact on the company was a troubling sign of fragility in its supply chain.

“Apple basically said they fulfilled about $5 billion of back revenue on the last conference call,” BofA Securities analyst Wamsi Mohan told Yahoo Finance. “That's $5 billion for one facility shut down in China.”

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The most populous country in the world, India has a growing middle class that could prove to be a boon for Apple.

“China took probably five years before it really mattered,” Munster explained. “India probably takes 10 years, and the reason is they’ve got the population on their side, but the GDP per capita is about a quarter in India what it is in China. And so just in general, people don’t have … the same wealth in India as they do in China.”

Apple opened its first official store in India last year, with Cook himself kicking off the festivities for the Mumbai location. Apple also builds some of its latest iPhones in the country, making it even more important for the company.

[Nervous Tick]

I’d love watching AAPL tank, and Apple the Company’s BOD forced to can the faggot in chief Timmy Cook.

Justice.