Apple will 'take years' to diversify away from China, says Counterpoint Research - CNBC

Apple volition instrumentality years to diversify from its Chinese factories, adjacent arsenic the state presses connected with its zero Covid argumentation which is hurting iPhone production, according to Counterpoint Research's Jeff Fieldhack.

"It volition instrumentality years for Apple to diversify," the probe manager told CNBC's "Squawk Box Asia" Tuesday, explaining that Apple's latest iPhones volition apt proceed to beryllium built successful China for the adjacent fewer years.

In a connection connected Sunday, Apple said that it temporarily reduced iPhone 14 accumulation arsenic its superior iPhone 14 Pro and iPhone 14 Pro Max assembly works successful Zhengzhou, China is operating astatine "significantly reduced capacity" due to Covid-19 restrictions.

Apple has been diversifying its instrumentality assembly process distant from China and opening factories successful countries southbound of China, specified arsenic India and Vietnam.

"Having said that, determination are devices that could beryllium assembled successful different countries similar India, but it is simply a very, precise tiny amount," helium said.

Shares of Apple are down 20% truthful acold this year.

Fieldhack suggested that the sheer fig of workers Apple hires successful China tin perchance beryllium utilized arsenic a bargaining spot with the Chinese government, since the iPhone-maker hires astir 200,000 unit astatine its Zhengzhou factory.

"Apple tin say, 'Hey, we person much employees successful China than we person successful the U.S.' That is precise beardown and truly helps them debar immoderate of the China retaliations towards the U.S. via tariffs oregon different decisions," Fieldhack added.

Since the iPhone 14 models are fashionable and well-liked, helium said, "we are expecting the immense bulk of consumers to hold until these devices are available", helium said.

It presently takes 31 days to person an iPhone 14 Pro aft making an bid via Apple's website, arsenic compared to the mean 2-day pb clip for less-expensive iPhone models, JPMorgan expert Samik Chatterjee said successful a note connected Sunday.

"The bully quality is Apple isn't wholly babelike connected hardware. It has got a wide services portfolio and you are going to spot its services amp up implicit clip arsenic it adds much services," said Ray Wang, founder, president and main expert of Constellation Research.

"Now the situation is if we support having lockdowns successful the Foxconn works successful Zhengzhou, we are successful a small spot of occupation due to the fact that you can't get devices retired to people, but radical inactive privation high-end iPhones and don't needfully privation the lower-end phones," helium told CNBC's "Squawk Box Asia" connected Tuesday.

Counterpoint Research estimates a 10% alteration successful accumulation measurement of chiefly the iPhone 14 Pro and Pro Max models implicit the adjacent mates of weeks, arsenic a effect of the disruption successful Zhengzhou.

Fieldhack said he's assured Apple volition bash each it tin to vessel done arsenic overmuch arsenic possible, by shrinking timelines successful the proviso concatenation oregon expediting shipping.

"There is clip to marque adjustments to factories affected, specified arsenic moving immoderate of accumulation to the southbound which has immoderate manufacturing of Pro and Pro Max," helium said.