Leading telecom analyst Craig Moffett believes Apple’s idea to shift iPhone assembly from China to India is not as simple as it sounds. Recently, after a Financial Times report hinted at Apple’s intentions to move significant production to India by the end of next year, Moffett shared his concerns with clients.
In his detailed note, Moffett highlighted that although moving assembly might help tackle some tariff-related costs, it won’t fix the larger supply chain issues. The majority of iPhone components are still manufactured in China, meaning shifting final assembly alone won’t solve tariff problems entirely.
Why Moving iPhone Assembly to India is Unrealistic
According to Moffett, Apple’s deep-rooted supply chain ecosystem in China makes a swift transition extremely difficult. He explained that tariffs create a “menu of problems,” and moving to India addresses only a small part of it.
“Even if Apple assembles phones in India, key components would still come from China. So tariffs and global trade tensions will continue to impact costs and overall sales,” Moffett shared during CNBC’s “Fast Money” show.
Moreover, Moffett mentioned that a global trade war affects both production costs and sales demand. While shifting assembly might marginally reduce production costs, declining consumer demand could pose a bigger threat.
Craig Moffett Lowers Apple’s Stock Target
Due to these challenges, Craig Moffett lowered his Apple stock price target from $184 to $141 — implying a sharp 33% drop from the last closing price. This price target currently stands as the lowest among major Wall Street analysts, according to FactSet.
Despite his “sell” rating on Apple since early January, Moffett clarified that he does not view Apple as a bad company. “Apple still has a fantastic balance sheet and strong brand loyalty,” he said. “My concerns are strictly about its stock valuation and the upcoming economic pressures.”
Since Moffett’s downgrade in January, Apple shares have already fallen by about 14%.
Tariff Pressures and Carrier Resistance
Adding to Apple’s hurdles, major U.S. telecom carriers like AT&T, Verizon, and T-Mobile have announced they will not absorb the added tariff costs on smartphones. This means consumers will directly bear the brunt through higher prices, leading to slower upgrade cycles and reduced demand.
Moffett warned that this “demand destruction” would likely result in longer holding periods for existing phones and weaker sales forecasts for next year.
Competition Heating Up in China
Another serious concern raised by Moffett is the growing anti-Apple sentiment in China amid the ongoing trade tensions. As nationalistic sentiments rise, many Chinese consumers are now preferring local brands like Huawei and Vivo over Apple products.
“Sales volumes are clearly shifting towards domestic brands in China, creating a significant competitive disadvantage for Apple,” Moffett pointed out.
Apple’s Upcoming Earnings Report
Despite all the concerns, Apple stock has seen a bounce recently, gaining over 6% in the past week. Investors are now eagerly awaiting Apple’s quarterly earnings report, scheduled for release next Thursday after market close.
The results could either validate Moffett’s bearish outlook or offer some reassurance to investors hoping Apple can weather the storm.