Apple exposure in China ‘manageable but significant’ as COVID cases rise

“Apple/Foxconn have the ability to relocate production to other areas in the short term provided that there is not a significantly higher duration of lockdown”

What you need to know

Apple suppliers are being disrupted by COVID again.
Foxconn has had to shut down its iPhone plant in Shenzhen, China.
One analyst says that Apple’s exposure is ‘manageable but significant’.

New insight from Bank of America says that Apple’s exposure in China is ‘manageable but significant’ as new COVID measures force iPhone production in the country to stop.

Bank of America analyst Wamsi Mohan, as reported by Seeking Alpha, stated:

Bank of America analyst Wamsi Mohan, who has a buy rating and a $215 price target, noted that Apple has a “manageable but significant” exposure to Shenzhen, where Foxconn (OTC:FXCOF) has a manufacturing plant, calling it a “a hub for a material part of the iPhone supply chain.”

Mohan added that Apple and Foxconn do have the ability to relocate production to other areas “provided that there is not a significantly higher duration of lockdown” with other sites in China picking up the slack. Mohan did warn, however, that a longer shutdown beyond the current one-week measure could have “ripple effects” on Apple’s supply chain and impact the availability of products like its best iPhone, the iPhone 13.

As reported Monday, Apple’s main partner Foxconn has suspended operations at two campuses, reallocating production to other sites as a result of measures to combat a fresh wave of COVID cases in the region.

China was the first country to see major effects of the pandemic in 2020, causing severe disruption to Apple’s operation there, impacting the availability of products at the time, as well as hampering efforts to create its next generation of devices.