The Cupertino, California-based company that makes over 90% of its products in China said it plans to shift production of iPhones to India to minimise the impact of President Donald Trump’s trade war.
“It looks like Apple is progressing faster than expected with its move to shift production of US phones into the region (India),” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Analysts at Wedbush echoed this view, referring to India as Apple’s “life raft supply chain” as the company navigates through tariff turbulence.
Cook outlined how Apple has started to build up a stockpile of products so that the majority of its devices sold in the US this quarter will not come from China.
“Tim Cook did his best to reassure investors on last night’s earnings call, but many likely came away still wanting more clarity about what lies beyond June,” Matt said, adding that the US$900 million hit to profit turned out to be smaller than many had feared.
Apple, which has been grappling with increased competition in key market China from rivals like Huawei due to slower rollouts of artificial intelligence (AI) features, was already in troubled waters before the tariffs hit.
“The question for investors is what can replace China for Apple? This is not an easy question to answer and could threaten the long-term trajectory of Apple’s growth plan,” said Kathleen Brooks, research director at XTB.
Despite electronics being exempted from US President Donald Trump’s slew of import tariffs so far, Washington has signaled that some levies could be imposed in the coming weeks.
Big Tech peers Alphabet, Microsoft and Meta Platforms beat quarterly estimates aided by AI, while Amazon.com’s cloud revenue growth fell short of revenue expectations.
These results were in stark contrast to dour forecasts from consumer electronics companies that are more exposed to tightening consumer budgets – chipmakers Qualcomm, Samsung Electronics and Intel.
Apple shares lost about 15% so far this year. That compares with a 2.3% fall in Meta, and a nearly 1% rise in Microsoft.
Apple’s 12-month forward price-to-earnings ratio is 27.63, compared with Microsoft’s 28.64 and Meta’s 21.48.