① Wedbush Securities (Wedbush) said Cook's trip to China may have sent a clear signal: Apple is seeking to “increase strategic investment in China at a critical moment”; ② Wade Bush expects that in the future, the vast majority of Apple's iPhone production and supply chain will remain in China.
Financial Services Association, March 26 (Editor Liu Rui) Apple CEO Tim Cook's trip to China last week attracted a lot of attention: in addition to celebrating the opening of Apple's largest store in China, Jing'an, he also met with many of Apple's major domestic suppliers. Additionally, he attended the China Development High-Level Forum in Beijing and was met by China's Minister of Commerce Wang Wentao.
On Monday EST, Wedbush Securities (Wedbush) said Cook's trip to China may have sent a clear signal that Apple is seeking “greater strategic investment in China at a critical moment.”
Apple will “double its investment” in the Chinese market
In 2023, Apple became China's largest smartphone supplier. At the same time, China is also Apple's largest overseas market. Currently, however, Apple is clearly facing fierce competition from local Chinese smartphone manufacturers such as Huawei in the Chinese market.
According to the latest report released by market research agency Counterpoint Research, sales of Apple iPhone phones in the Chinese market plummeted 24% year over year in the first six weeks of 2024.
Zhang Mengmeng, a senior analyst at Counterpoint Research, said, “In the high-end market, Apple is facing fierce competition from the strong return of Huawei, while being squeezed by aggressive pricing from manufacturers such as OPPO, Vivo, and Xiaomi.”
Analysts at Wade Bush believe that before the iPhone 16 is released, Apple needs to overcome the challenges it faces in China, including macroeconomic headwinds and competition from Huawei. “It all starts with reaffirming Apple's presence in China.”
“As China is an important market for Apple, turning these challenges into opportunities is critical for the upcoming iPhone 16.”
While Cook is watching the Chinese market, the company is also facing regulatory challenges in Europe and the US: on Thursday, the US Department of Justice sued Apple, accusing the technology company of illegally maintaining a monopoly on smartphone apps; this Monday, the European Union also launched an investigation against Apple over so-called anti-manipulation rules.
“The timing of this visit is very important because essentially speaking, Apple needs China, and China needs Apple,” Wade Bush said.
Most of Apple's supply chain will remain in China
At the end of 2022, as the COVID-19 pandemic once seriously disrupted Apple's supply chain in China, there were concerns that Apple would transfer its supply chain. However, Cook's current trip to China was clearly intended to allay these concerns.
During this trip to China, Cook had special discussions with BYD Chairman Wang Chuanfu, Lansi Technology Chairman Zhou Qunfei, and Changying Precision General Manager Chen Xiaoshuo, and emphasized during the meeting: “For Apple's supply chain, I don't think there is a more important place than China.”
Analyst Wade Bush said, “Over the past year, there have been claims that Apple is diversifying its supply chain outside of China, and geopolitical tension also loomed over Cupertino (where Apple is headquartered). But the opposite is true; we've already discussed that Apple has actually increased its investment and retail footprint in China over the past year.”
“Cook's important visit to China last week laid the foundation for Apple's future in China.” Wade Bush predicts, “In the future, the vast majority of Apple's iPhone production and supply chain will remain in China.”