Bernstein: Apple may face backlash from migrating some production out of China

Investing.com -- Apple (NASDAQ:AAPL) potentially faces "acute" risks if it chooses to shift some manufacturing bases away from China, analysts at Bernstein argued on Friday, citing in part ongoing trade tensions between the U.S. and Beijing.

In a note, the analysts said 70% of the tech giant's manufacturing locations and an estimated 90% or more of its assembly production capacity are now in China. Meanwhile, Bernstein's analysis suggests that China is also home to 40% of the manufacturing sites used by Apple's component suppliers.

The iPhone maker could subsequently become too reliant on the country to assemble its items, the analysts flagged. To mitigate this risk, they said that the company may choose to move a portion of its supply chain from China to destinations like India and Vietnam, although this process could last for some time.

"While Apple appears committed to diversifying its manufacturing base, we believe it could take 3 [to] 5 years to migrate 25% of Apple’s final assembly outside China," the analysts wrote.

They also warned that such an abrupt migration could lead to a consumer or political backlash against Apple in China -- a market that accounts for nearly a fifth of its global revenues. These problems could magnify should already strained trade relations between the U.S. and China become worse, the analysts noted.

This week, tensions intensified after the Biden administration rolled out a new ban on some investments into Chinese firms that specialize in sensitive technologies like semiconductors, quantum computing, and artificial intelligence. Officials in China later hinted that they could retaliate against the move.