- Craig Moffett, a top analyst, doubts Apple’s plan to shift iPhone assembly to India will significantly reduce tariff-related costs, as the supply chain remains tied to China.
- Moffett cut Apple’s price target to $141 from $184, implying a 33% drop, citing tariff-driven cost increases, potential demand destruction, and competition in China from brands like Huawei.
- Despite a 6% stock gain last week, Apple (AAPL) faces challenges from U.S. carriers refusing to subsidize tariff costs and a slowing consumer market, which could impact 2025 earnings.
Apple’s (AAPL) ambitions to diversify its iPhone production face skepticism from leading analyst Craig Moffett, who argues that shifting assembly to India is unlikely to resolve the complex challenges posed by U.S. tariffs, according to a CNBC report. Moffett, a top-ranked analyst by Institutional Investor and senior managing director at MoffettNathanson, emphasized that Apple’s supply chain remains deeply rooted in China, where iPhone components are manufactured, limiting the cost-saving potential of relocating assembly. Despite Apple’s reported plans, as noted by the Financial Times, to move production to India by the end of next year, Moffett told CNBC’s “Fast Money” that such a shift would only marginally alleviate tariff-related pressures. He highlighted that tariffs create a dual challenge – escalating production costs and dampening sales – while moving to India might not significantly mitigate either.
Moffett’s analysis, shared in a memo to clients, underscores the intricacies of global trade dynamics. He contends that even if assembly shifts to India, the reliance on Chinese components would sustain exposure to tariffs, which could inflate costs passed on to consumers. This concern is compounded by resistance from U.S. carriers like AT&T (T), Verizon (VZ), and T-Mobile (TMUS), who have explicitly stated they will not absorb tariff-driven price increases on handsets, potentially leading to higher iPhone prices. Moffett warned that this could result in demand destruction, with consumers extending device holding periods and slowing upgrade rates, ultimately trimming Apple’s 2025 earnings estimates. His outlook reflects broader macroeconomic pressures, including a potential deceleration in consumer demand, which could further strain Apple’s market performance.
The analyst’s bearish stance is reflected in his revised price target for Apple, cut to $141 from $184, signaling a potential 33% drop from Friday’s $209.28 per share close and marking the lowest target on Wall Street, per FactSet. Moffett, who has maintained a ‘Sell’ rating on Apple since January 7, noted that the stock has already declined 14% since then. Despite Apple’s strong balance sheet and robust consumer franchise, he argues that its valuation is overstretched, particularly in the context of tariff risks and weakening demand in key markets like China. Moffett pointed to growing competition from local Chinese brands such as Huawei and Vivo, which are capturing market share amid backlash against U.S. tariffs, further threatening iPhone sales in the region.
Apple’s stock, however, showed strength last week, gaining more than 6% ahead of its quarterly earnings report scheduled for next Thursday after market close. Moffett remains cautious, emphasizing that Apple’s challenges are not rooted in its operational strength but in external pressures that no product company can fully evade. The interplay of tariffs, supply chain constraints, and shifting consumer behavior in a tariff-impacted global economy could redefine Apple’s growth trajectory, making Moffett’s warnings a critical lens for investors navigating the company’s future.
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