Apple Inc. (NASDAQ:AAPL) could move iPhone production from China

Apple Inc. (NASDAQ:AAPL) could move iPhone production from China

Apple Inc. (NASDAQ:AAPL) could move iPhone production from China

Earlier this week, Apple’s biggest manufacturing contractor said that it could move iPhone production from China so that Apple could avoid any additional import tariffs imposed by the Trump Administration. The problem is that actually making the move may be too complicated and expensive for Apple.

Speaking to investors this week, Young Liu, semiconductor chief of Hon Hai Precision, also known as Foxconn, said that 25% of his company’s production capacity is outside China and that those facilities could handle any needed iPhone work, according to Bloomberg. He didn’t specify what countries the manufacturing could be moved to.

But in the end, that doesn’t really matter, according to analysts. Moving production isn’t feasible.

“Apple has made a big bet on Foxconn and China and in our estimation, can only move 5% to 7% of iPhone production to India in a best case scenario over the next year,” Wedbush analyst Dan Ives told Fortune. He described Foxconn’s China factories the “hearts and lungs of iPhone production globally” and that they were irreplaceable.

Questions about Apple overseas manufacturing come amid increasing tensions between the U.S. and China over trade relations. Because of Apple’s size and dependence on Chinese sales and labor, the company has become a focal point in the trade war.

Apple CEO Tim Cook has waged one of the highest-profile campaigns in tech to convince President Donald Trump to ease tensions with China. Cook has also been outspoken in news interviews, telling CBS News last week that he wanted the trade battle to end while he minimized its impact on Apple.

However, the U.S. and China are still fighting. President Donald Trump is considering a new $300 billion tariff on China that could, some analysts said, increase Apple’s iPhone production costs by as much as 14%.

China could alienate Chinese consumers, who account to a big part of the company’s business. The result could be a financial disaster for Apple.

For the record: In its fiscal second quarter in China, Apple had $10.2 billion in revenue and $3.6 billion in adjusted profits, which exclude certain expenses. To complicate matters further, Apple’s sales in China have shrunk recently, partly because of support by Chinese consumers for domestic device makers.

So, while it’s theoretically possible for Foxconn to manufacture Apple products outside China, according to analysts, the chance it will happen is small. The risks are too high, they say, and the potential benefits are too limited.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 204.14.

The projected lower bound is: 184.17.

The projected closing price is: 194.15.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.8046. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 58.61. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 7 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 108.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed down -0.040 at 194.150. Volume was 24% below average (neutral) and Bollinger Bands were 12% wider than normal.

Open High Low Close Volume___
194.700 196.790 193.600 194.150 21,674,624

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 186.16 194.40 190.02
Volatility: 30 33 40
Volume: 27,447,328 28,847,528 34,681,376

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

APPLE INC is currently 2.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 0 periods.

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