Apple Stock: the iPhone Maker Wants to Hurt Suppliers by Making its Own Chips

Apple Stock

Apple Stock (NASDAQ:AAPL)

As part of its efforts to reduce its reliance on suppliers and technology partners such as Broadcom (NASDAQ:AVGO), Qualcomm (NASDAQ:QCOM), Samsung, and LG, Apple (NASDAQ:AAPL) is planning to put more of its own homemade components in its devices. This is part of Apple’s efforts to put more of its own homemade components in its devices. Apple stock has already gained 6% so far this year.

The most recent story from Bloomberg indicates that the company plans to utilize its own custom displays in its mobile devices as early as 2024, replacing those that Samsung and LG now supply. By the end of the next year, it is anticipated that the business will replace the display that is included in its high-end Apple Watch with a display that was designed in-house.

The company making the iPhone has other plans to cut ties with Broadcom, including developing a significant processor in-house by 2025. It is anticipated that Apple will have its in-house cellular modem chips ready by the end of 2024 or the beginning of 2025. These chips would eventually replace Qualcomm modem chips found in Apple’s various devices.

Apple has replaced Intel (NASDAQ:INTC) CPUs in its MacBooks with its own Apple Silicon to move away from using Intel’s products. The most recent turn of events is not a good sign for Broadcom and Qualcomm, especially considering that Apple is one of the companies’ primary sources of income.

Apple’s Internal Strategy for Gaining Greater Control Over the Supply Chain

The performance of Apple’s share price relative to the S&P 500 Index during the past year was worse than the index’s 19.4% loss. Investors were concerned about the tech giant’s ongoing supply chain concerns in China, which led to Apple stock price falling by over 30% in 2022.

In the past year, Apple has had considerable difficulties due to shortages in components and bottlenecks in its supply chain that are directly tied to the epidemic. It is anticipated that its Chinese partner Foxconn’s facility in Zhengzhou may cause delays in the company’s iPhone shipments throughout the holiday season.

Apple will be able to exert more control over its supply chain as a result of its aspirations to use more chips developed in-house. Additionally, it is broadening its production base, as Apple plans to start manufacturing some of its MacBooks in Vietnam as early as May 2023.

The production base for Apple products has shifted away from China and toward Vietnam and India in recent years. Already on the market are Vietnamese-made AirPods, iPads, and Apple Watches. The iPhone 14 has begun production at the Foxconn facility in Sriperumbudur, which is located near Chennai. Foxconn is an Apple partner.

Apple will have a second production site for all of its gadgets, with the production of some of its MacBooks relocating to Vietnam. The first production base is located in China. It is anticipated that some AirPods and Beats earphones manufacturing may relocate to India.

Apple’s primary drivers of growth include, despite this, an expanding customer base in its Services division as well as a robust liquidity position. More than 900 million paid subscriptions are active across all of the company’s various devices.

Apple’s App Store continues to garner the attention of notable developers worldwide, enabling the business to provide users with compelling new applications and boost overall traffic to the App Store. Since 2008, this company has distributed $320 billion in payments to developers to sell digital goods and services. In addition, the proliferation of AI apps will encourage an increase in the number of people who subscribe to the Apple App Store.

Featured Image: Pexels @ Pixabay

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.