Analyst Casts Doubt On Apple's Reported Move To Shift iPhone Production To India Amid Rising China Tariff Pressures: 'Doesn't Solve All The Problems'
Apple Inc. is considering moving iPhone production to India, but analyst Craig Moffett doubts its effectiveness in reducing tariff impacts from China. He argues that while it may help, many components will still be sourced from China, leaving uncertainty over tariff rates. Moffett also noted that the trade war could hurt iPhone demand in China, with local competitors gaining market share. He recently lowered his price target for Apple stock from $184 to $141, while UBS analyst David Vogt reduced his target from $236 to $210 due to anticipated tariffs.
Apple Inc. AAPL is reportedly considering a shift of iPhone assembly to India. However, a renowned analyst has expressed skepticism about the potential effectiveness of this move in mitigating the impact of China tariffs.
What Happened: Craig Moffett, apartner and senior managing directorat MoffettNathanson, questioned the feasibility of Apple’s plans on Friday. He argued that the shift to India wouldn’t significantly reduce costs related to tariffs, though it would help to some extent, asiPhone components would still bemanufactured in China, reportedCNBC.
“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems,” Moffett told CNBC’s “Fast Money”. "I would question how that's going to work,” stated the analyst.
He added that a trade war impacts both the cost of goods and demand and iPhone may face issues on the latter.
Last week, in a note to clients, MoffettNathanson reasoned that India has enough capacity to fulfill up to half of the U.S. demand for iPhones. Moreover, as the parts would still be from China, there remains an uncertainty over whether the iPhones would face Indian or Chinese tariff rates — or possibly an expensive mix of both.
Moffett told CNBC that the backlash against Apple in China, triggered by U.S. tariffs, will negatively impact iPhone sales. "Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple,” stated the analyst.
Moffett points out that Apple also isn't receiving support from its carriers AT&T T,Verizon VZ,andT. Mobile TMUS to help soften the impact of tariffs, after they declared that they won’t be absorbing the additional costs of tariffs on handsets.
Moffett slashed his price target on Apple stock on Apr 21 to $141 from $184 a share.
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Why It Matters: This skepticism on the heels of previous week’s report that Apple plans to import most of the iPhones it sells in the U.S. from India by the end of 2026. This would require the company to double its annual iPhone output in India to over 80 million units.
UBS analyst David Vogt lowered his price target for Apple from $236 to $210 in anticipation of widespread tariffs. Vogt noted that Apple seemed to have expedited the shipment of around one million iPhones, leading to a year-over-year rise in iPhone revenue for the March quarter.
That being said, Moffett is not completely bearish on the iPhone maker. "I think quite highly of Apple. My concern about Apple has been the valuation more than the company."
Benzinga’s Edge Rankings highlight strong momentum and quality rankings for Apple in the 76th and 85th percentiles, respectively. Curious how other stocks stack up? Click here to uncover growth and momentum scores for top stocks.
Over the past month, Apple stock declined nearly 4%, as per Benzinga Pro.
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