New York, NY – Apple’s ambition to shift its entire iPhone production to India by 2026 is facing skepticism from a seasoned analyst. Craig Moffett, a partner and senior managing director at MoffettNathanson, and a repeatedly recognized top analyst by Institutional Investor magazine, believes the plan to relocate iPhone assembly to India is unrealistic.
The report, which surfaced Friday, suggested Apple’s intention to gradually move its production operations from China to India by the end of next year. Moffett swiftly issued a warning to clients following the news.
Moffett questions whether this industrial migration will effectively reduce tariff-related costs, given that iPhone components will still be manufactured in China.
The tariff policies create a lot of problems, and moving to India doesn’t solve all of them. It may help to some degree, Moffett stated in an interview with CNBC. But I’m skeptical about how effective it will be in practice.
Moffett argues that shifting production capacity to India is far from a simple task. He cautioned clients that Apple’s supply chain remains deeply rooted in China and is likely to encounter resistance.
At the end of the day, the global trade war is essentially a two-front battle, impacting both costs and sales. Moving assembly to India might (we emphasize might) help alleviate the former, but the latter could be the ultimate challenge, he wrote in a note to clients.
This past Monday, Moffett lowered Apple’s stock price target from $184 to $141, representing a potential downside of 33% from Friday’s closing price. According to financial data firm FactSet, this target price is also the lowest on Wall Street.
I don’t think of myself as the biggest Apple bear, Moffett said. I have a high regard for Apple. My main concern is Apple’s valuation, not the company itself.
Moffett has maintained a sell rating on Apple since January 7th. Since then, Apple’s stock price has fallen by approximately 14%.
This is not because Apple is poorly managed. They still have a solid balance sheet and a consumer business moat, he said. But the reality is that as a product-based company, when core products face significant tariff pressures and target markets may experience a slowdown in consumer demand due to macroeconomic factors, it’s difficult to find a perfect solution.
Moffett specifically mentioned that telecom operators are not helping Apple mitigate the impact of tariffs.
You also have to deal with demand erosion due to potential price increases. This week, AT&T, Verizon, and T-Mobile all stated that they would not bear the additional cost of increased mobile phone tariffs, Moffett added. Consumers will have to bear this cost, which will inevitably lead to longer upgrade cycles, slower upgrade frequencies, and ultimately impact demand. All of this may lower market consensus expectations for next year.
Regarding the Chinese market, Moffett warned that market resistance due to geopolitical factors will affect iPhone sales.
This is a very real problem, Moffett said. Market share is substantially shifting to Huawei, vivo, and other local Chinese brands, rather than Apple.
Despite Moffett’s concerns, Apple stock performed well this week, rising by over 6%. Apple is scheduled to release its earnings report after market close next Thursday. The report will be closely watched for any signs of the challenges Moffett outlined, and whether Apple can successfully navigate the complex geopolitical and economic landscape. The company’s ability to adapt and innovate will be crucial in determining its future success in both the short and long term.
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