Apple will take years to diversify from China factories: Counterpoint

A display of iPhone 14 smartphones at the Apple Inc. Regent Street store in London, UK.

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Apple will take years to diversify from its Chinese factories, even as the country pursues its zero Covid policy which is harm iPhone productionaccording to Jeff Fieldhack of Counterpoint Research.

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

In a statement on Sunday, Apple said it had temporarily curtailed iPhone 14 production as its main iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China, is operating at “significantly high capacity.” scaled down”. due to Covid-19 restrictions.

Apple has diversified its device assembly process outside of China and opened factories in countries south of China, such as India and Vietnam.

“Having said that, there are devices that could be assembled in other countries like India, but it’s a very, very small amount,” he said.

Apple shares are down 20% year-to-date.

Fieldhack suggested that the sheer number of workers Apple hires in China could potentially be used as bargaining chips with the Chinese government, since the iPhone maker hires around 200,000 people at its Zhengzhou factory.

“Apple can say, ‘Hey, we have more employees in China than in the United States.’ other decisions,” Fieldhack added.

Given that the iPhone 14 models are popular and loved, “we expect the vast majority of consumers to expect these devices to be available,” he said.

It currently takes 31 days to receive an iPhone 14 Pro after placing an order through Apple’s website, compared to the average 2 days for cheaper iPhone models, JPMorgan analyst Samik Chatterjee said in a note on Sunday.

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Counterpoint Research estimates a 10% decrease in production volume of mainly iPhone 14 Pro and Pro Max models over the next two weeks, due to the disruption in Zhengzhou.

Fieldhack said he’s confident Apple will do everything possible to ship as much as possible, reducing delays in the supply chain or speeding up shipping.

“It’s time to make adjustments to affected factories, like moving some production to the south which has some Pro and Pro Max manufacturing,” he said..

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