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Apple (AAPL) Commences Production of iPhone 13 in India
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Apple (AAPL - Free Report) recently commenced production of its latest model iPhone 13 in India. The move is in sync with the company’s efforts to reduce its dependency on the Chinese manufacturing market, which is grappling with supply chain issues.
The phone is being manufactured by Foxconn, one of the two key manufacturers of Apple in India, in their local facility in Sriperumbudur in the Indian state of Tamil Nadu. The latest iPhone joins three other models, namely iPhone SE, iPhone 11 and 12 and is expected to cater to the local Indian market — the second-largest smartphone market in the world, according to Reuters.
Apart from India, Apple has been shifting focus to emerging economies like Brazil, Mexico and Vietnam to diversify production away from China and address the impending supply chain issue costing the company millions.
Apple’s Diversified Production Model: A Key to Beating Supply Chain Issues
Apple is one of the big tech companies whose business has been affected by the volatility in the global economy.
China has recently discovered a new variant of the coronavirus that has infected more than 13,000 people in the country, and consequently, operations got disrupted. Along with this, the ongoing Russia-Ukraine war has aggravated the year-long chip shortage, affecting various industries ranging from PCs to smartphones.
This turmoil-induced volatility in the global financial markets might sustain the higher interest rate environment. It has resulted in higher commodity prices, which may curtail U.S. GDP growth in the first quarter of 2022. It is worth mentioning that the U.S. inflation rate is currently at a 40-year high. As a result, investors of Apple are wary as demand for the company’s products is declining.
Apple has halted its production in Russia, where it had a 16% market share last year. Consequently, the company is lowering its production plans for iPhone SEs by 20%, which is about 2 million to 3 million units, per Nikkei Asia.
iPhone 13 production is anticipated to be reduced by a couple of millions. AirPods production is being reduced by 10 million units.
As such, the company stocks have fallen 6.6% in the year-to-date period compared with the Zacks Computer-Mini Computers industry and the Zacks Computer and Technology sector’s decline of 6.2% and 17.1%, respectively.
The company’s robust business model to diversify the production of all its products across growing economies is becoming one of the key differentiators for the company’s profitability. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rising inflation is expected to increase production costs for Apple and simultaneously reduce demand for the product. As such shifting manufacturing from China to India will help the company in decreasing some of the production cost as labor cost is fairly low in India. Further, India being the second-largest smartphone market in the world will help the company in attracting more customers and winning market share.
Other Stocks to Consider
While Apple is a good stock to buy, here are some other top-ranked stocks in the broader Computer and Technology sector worth considering.
Image: Bigstock
Apple (AAPL) Commences Production of iPhone 13 in India
Apple (AAPL - Free Report) recently commenced production of its latest model iPhone 13 in India. The move is in sync with the company’s efforts to reduce its dependency on the Chinese manufacturing market, which is grappling with supply chain issues.
The phone is being manufactured by Foxconn, one of the two key manufacturers of Apple in India, in their local facility in Sriperumbudur in the Indian state of Tamil Nadu. The latest iPhone joins three other models, namely iPhone SE, iPhone 11 and 12 and is expected to cater to the local Indian market — the second-largest smartphone market in the world, according to Reuters.
Apart from India, Apple has been shifting focus to emerging economies like Brazil, Mexico and Vietnam to diversify production away from China and address the impending supply chain issue costing the company millions.
Apple’s Diversified Production Model: A Key to Beating Supply Chain Issues
Apple is one of the big tech companies whose business has been affected by the volatility in the global economy.
China has recently discovered a new variant of the coronavirus that has infected more than 13,000 people in the country, and consequently, operations got disrupted. Along with this, the ongoing Russia-Ukraine war has aggravated the year-long chip shortage, affecting various industries ranging from PCs to smartphones.
This turmoil-induced volatility in the global financial markets might sustain the higher interest rate environment. It has resulted in higher commodity prices, which may curtail U.S. GDP growth in the first quarter of 2022. It is worth mentioning that the U.S. inflation rate is currently at a 40-year high. As a result, investors of Apple are wary as demand for the company’s products is declining.
Apple has halted its production in Russia, where it had a 16% market share last year. Consequently, the company is lowering its production plans for iPhone SEs by 20%, which is about 2 million to 3 million units, per Nikkei Asia.
iPhone 13 production is anticipated to be reduced by a couple of millions. AirPods production is being reduced by 10 million units.
As such, the company stocks have fallen 6.6% in the year-to-date period compared with the Zacks Computer-Mini Computers industry and the Zacks Computer and Technology sector’s decline of 6.2% and 17.1%, respectively.
The company’s robust business model to diversify the production of all its products across growing economies is becoming one of the key differentiators for the company’s profitability. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rising inflation is expected to increase production costs for Apple and simultaneously reduce demand for the product. As such shifting manufacturing from China to India will help the company in decreasing some of the production cost as labor cost is fairly low in India. Further, India being the second-largest smartphone market in the world will help the company in attracting more customers and winning market share.
Other Stocks to Consider
While Apple is a good stock to buy, here are some other top-ranked stocks in the broader Computer and Technology sector worth considering.
ASGN (ASGN - Free Report) carries a Zacks Rank #2.
ASGN shares have slumped 9.7% in the year-to-date period, compared with the Zacks Computers - IT Services industry’s decline of 20.6%.
Arista Networks (ANET - Free Report) sports a Zacks Rank #1.
Arista shares have slumped 11.5% in the year-to-date period, compared with the Zacks Communication - Components industry’s decline of 9.7%.
Bel Fuse (BELFB - Free Report) flaunts a Zacks Rank #1.
Bel Fuse shares have returned 22.6% in the year-to-date period, against the Zacks Electronics - Miscellaneous Products industry’s decline of 28.3%.