Tech giant Apple (AAPL) is making major changes to its supply chain in order to reduce its reliance on China by increasing its production in India. And as part of this strategy, Apple plans to source more than 19 billion chips from the U.S. this year. Indeed, CEO Tim Cook spoke about Apple’s growing partnership with Taiwan Semiconductor (TSM), which is expanding its Arizona facilities. At the same time, Apple expects that most of the iPhones sold in the U.S. will eventually be made in India. Interestingly, India came up often during Apple’s post-earnings call, which shows just how important it has become both as a market and a production base.
To strengthen its U.S. production, Apple will buy tens of millions of advanced processors from TSMC’s Arizona plant, which is already making chips for low-end iPads and Apple Watches. Apple also sources glass for iPhone screens from U.S.-based Corning (GLW) and has announced a $500 billion investment plan in the U.S. over the next four years. This includes building AI servers in Texas. Nevertheless, Apple still faces some major challenges, and Cook avoided providing details on how new tariffs might affect the business by saying it is hard to predict beyond June.
In addition, investors were disappointed by Apple’s weak second-quarter results, especially its poor sales in China. As a result, shares are down more than 3% at the time of writing, as worries about rising tariffs and slowing demand in China added to investor worries. It is also worth noting that although President Trump wants Apple to build more devices in the U.S., large-scale production there is unlikely anytime soon. Therefore, for now, Apple will focus on buying more chips and parts locally and reduce risks by spreading out its supply chain.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 18 Buys, seven Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $233.37 per share implies 13.7% upside potential.
