Joe Lonsdale, founding partner at 8VC and co-founder of Palantir Technologies Inc. PLTR, has recommended Tim Cook-led Apple Inc. AAPL to consider relocating its iPhone supply chain from China.
What Happened: During an appearance on a Fox News show, Lonsdale discussed the challenges and potential risks faced by Apple in its current supply chain setup.
He acknowledged the dominance and popularity of the iPhone but raised concerns about the heavy reliance on Chinese manufacturing.
Lonsdale admitted to being an iPhone user and recognized the device’s strong market position.
However, he also highlighted the critical issue of Apple’s production being dependent on China’s supply chains.
According to Lonsdale, Apple might face pricing challenges if it shifted its production out of China, possibly resulting in a significant cost increase for consumers.
“You know, I just got a new iPhone. Yeah, I’m; we’re all pretty stuck on it. I think the bigger question for them is can they get their production out of China,” Lonsdale stated, adding, “They better hope they can get out of there because there could be some really serious issues where we’re not able to buy enough of them if they can’t sell things they produce in China.”
Lonsdale’s concerns stem from the growing geopolitical tensions and uncertainties surrounding China’s involvement in global technology supply chains.
Earlier this week, it was reported that Cupertino has been witnessing a slump in sales of its latest iPhone series in China. At the same time, local competitor Huawei Technologies Co. has staged a comeback.
Why It’s Important: Apple derives around 20% of its revenue from China. The company has reportedly brought in over $40 billion in China-based revenue annually since 2015 and almost $75 billion in sales last fiscal year.
Previously, it was reported that the Chinese government has extended an iPhone prohibition in some departments of government-backed agencies and state-owned enterprises.
However, last month, the Apple CEO landed in China and had the second high-stakes meeting this year with the Chinese commerce minister.
Meanwhile, China’s vice premier, Ding Duexiang, has also signaled the country’s readiness to provide Apple with “more opportunities.”
Image Source – Shutterstock
Check out more of Benzinga’s Consumer Tech coverage by following this link.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
