By Nigam Arora & Dr. Natasha Arora
Signal(s) to enter, add, reduce, exit, hold or change.
Apple (AAPL) derives about 20% of its sales from China. A majority of iPhones are manufactured in China. Due to geopolitics, Apple’s dependence on China has added significant risk to Apple stock. The good news is that Apple is aiming to capitalize on India’s population of 1.4 billion to reduce its dependence on China.
Shift From China
There are two important concepts here:
- India’s population has now surpassed China.
- Until recently all iPhones were manufactured in China. Apple is trying to diversify iPhone manufacturing out of China due to geopolitical tensions between the U.S. and China.
The Approach
Apple is taking a two-pronged approach.
- Increasing retail sales
- Building India up as a manufacturing hub
Retail Sales
Tim Cook is in India this week to celebrate the opening of Apple’s first two retail stores in India.
Currently, only a small part of Apple’s revenue comes from sales in India.
The challenge Apple must overcome is pricing. Most of its smartphones are out of reach for the average Indian consumer. Most smartphones in India cost $250 or less.
Manufacturing
While in India, Cook plans to meet with Prime Minister Modi and Deputy IT Minister Rajeev Chandrasekhar.
As Apple and other companies move more manufacturing from China to India, India will become a hardware manufacturing hub. Apple and Foxconn have already succeeded in doubling production from some factories by lobbying for factories to run 24 hours a day. There are government incentives for manufacturers to increase their presence as well.
Over the last year, more than $4.5B worth of iPhones were exported from India.
There are reports that Apple plans to assemble AirPods and iPads in India.
Jobs
India’s move to a global hardware manufacturing hub will bring a large number of jobs for its young population. Apple already supports over 1M developer jobs in India.
Zones
For those following the Good Way, the Buy Now rating is 🔒 (To see the locked content, please take a 30 day free trial).
For those following the Best Way, the buy zone is 🔒 .
The very long term target zone is 🔒.
What To Do Now
Those in AAPL stock may consider continuing to hold.
Those not in AAPL stock may consider following the parameters given above.
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This post was just published on ZYX Buy Change Alert.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
