Apple’s dependence on China for manufacturing could drastically drop within the next five years, with revenue from products manufactured in the country projected to plummet to less than a third, analysts said.
Deepwater Asset Management’s managing partner Gene Munster and research analyst Brian Baker predicted on Monday that revenue from Apple products manufactured in China could drop from an estimated 40-45% today to 25-30% by 2027.
They said their prediction was the result of Apple’s bid to find an alternative to China. The company’s dependency on the country has been keeping “investors up at night” in the midst of a complex geopolitical tussle between Beijing and Washington.
Apple relies on Taiwanese electronics firm Foxconn to manufacture a vast majority of its phones in China, while Chinese firm Luxshare has been tasked with assembling Apple’s upcoming Vision Pro mixed-reality headset.
India increasingly looks like it will provide that alternative, Munster and Baker said, with around half of the revenue projected to be lost from products manufactured in China estimated to go to the sub-continent state.
“In other words, India is central to Apple navigating China’s geopolitical production risk,” Muster and Baker said.
The prediction comes after Apple faced a turbulent few weeks earlier this month in the run up to the unveiling of the iPhone 15 amid developments in China that saw $200 billion wiped off the company’s market capitalization in the space of two days.
The Chinese government has announced a ban on the use of iPhones, while the release of a new 5G smartphone by rival company Huawei highlighted China’s ability to produce a high-end smartphone. It did so despite restrictions on its access to advanced technology from the US.
Apple did not immediately respond to Insider’s request for comment made outside of normal working hours.