Apple Stock Adjusting to Trump Era
Apple Inc. (NASDAQ:AAPL) changed the landscape of mobile telephony when it launched the first generation “iPhone” ten years back. However, with the current change in political climate, Apple stock has come under pressure. Investors are looking forward to more clarity on Donald Trump’s trade policies and till then, AAPL stock may trade subdued.
But a recent report brings attention back to Apple and its Asian partners. As per the the latest news, Apple’s supplier, Foxconn Technology Group, may invest in the United States to build a manufacturing facility.
According to a report in Nikkei Asian Review, Foxconn is planning to build a display-panel manufacturing facility in the United States in a joint venture with Apple Inc. that could create up to 50,000 jobs. The chairman and CEO of Foxconn, Terry Gou, said that the facility could cost about $7.0 billion and could create anywhere between 30,000 and 50,000 new jobs. (Source: “Foxconn chooses to play the Trump game,” Nikkei Asian Review, January 23, 2017.)
On Sunday, Terry Gou said that he is considering making an investment of over $7.0 billion to build a liquid crystal display (LCD) panel plant in the U.S. but has also expressed his intention that this could be possible if incentives are provided by the government.
Donald Trump had earlier openly stated that he was willing to provide incentives to Apple Inc. to build plants in the U.S. This came as a relief to AAPL stock, which also stands to benefit from his policies of lower corporate taxes and providing discounts on repatriation of overseas cash.
In an earlier report published by Nikkei Asian Review in November last year, it was reported that Foxconn had been considering the possibility of moving the production of the iPhone to the U.S. Apple Inc. is Foxconn’s biggest customer with more than 50% of the company’s sales coming from the iPhone maker.
Foxconn produces most of the Apple iPhones at its Chinese factories and the situation seems to have changed a lot since Donald Trump won the presidential elections last November. He has been openly targeting Apple Inc. and other companies for manufacturing outside the U.S.
This was an added challenge for Apple Inc. as the company was already struggling with declining iPhone sales. AAPL stock had also become a target for bears as there were reports that the production of the iPhone may be cut by about 10% in the January-March quarter of 2017. Nikkei Asian Review had reported that according to its information on production of the latest models and global sales, production cuts were likely in both the “iPhone 7” and “iPhone 7 Plus” lines in the coming quarter. (Source: “Apple to slice iPhone production 10%,” Nikkei Asian Review, December 31, 2016.)
Apple stock has recovered since then as investors get more optimistic about the growth prospects of the company’s services business. The company is also focusing on updating its line of “Macs” and may launch new “iPads” this year. Investors, who are looking forward to the quarterly results, may also expect some formal announcement of whether the Apple iPhone could come with a “Made in America” label in the future. AAPL stock is likely to move slowly in the coming days.