Apple iPhone: This Could Send Apple Stock Higher…

Apple Stock (AAPL) to Gain from iPhone Market Expansion

Apple Inc (NASDAQ:AAPL) is in news again after its partner Foxconn Technology Group grabbed headlines this weekend on the possibility of investing around $7.0 billion for a display-making plant in the U.S. Apple stock has strengthened of late and is hovering around the $120.0 level. There is a sense of optimism that has taken over since Donald Trump has started warming up to the tech community and promised to ease regulations and provide incentives to them. And the latest news on Apple iPhone production may bring some relief to investors who have been worrying over the future of iPhone.

Apple Inc has been in talks with the Indian government over iPhone production in the country.  Reports have just come in that Apple has had quite a constructive dialogue with Indian officials concerning the expansion of its local operations in the country.  According to sources familiar with the matter, Apple executives shall meet industry officials on Wednesday to further discuss the details of the plan. (Source: Apple says dialogue with India on local expansion plans was ‘constructive’, Reuters, January 25, 2017).

The company’s China issues have been growing severe for a while now, hitting AAPL stock hard. Apple Inc has been focusing on stopping the decline in iPhone sales by considering markets like India. This move has gained significance recently as there has been pressure from Donald Trump on Apple to stop building iPhones in China.

But shifting iPhone assembly to the U.S. would result in sharp rise in costs which may not go down well with either customers or investors. Assembling in India makes better sense not only from cost point of view but also from the view of the market potential of the country. The smartphone maker has also demanded a series of tax and sourcing concessions from India and is likely that the Indian government would agree to the demands. But perhaps, most importantly, Donald Trump sees India as a friend, which is good for Apple stock.

On Tuesday, Donald Trump spoke with the Indian Prime Minister Narendra Modi and said that Washington considers India a “true friend and partner in addressing challenges around the world.” It is said that Trump and Modi have discussed opportunities to strengthen their partnership on the economy and defense. (Source: Donald Trump tells Narendra Modi he considers India a ‘true friend’, CNN, January 25, 2017).

Donald Trump is more benign towards India as opposed to China and has called the latter as a currency manipulator. A number of companies are in a fix as the trade frictions are expected to increase under Trump administration. Moreover, Apple may consider joint investments with its partners to build plants in the U.S. that make strategic sense and would appease the Trump administration and help buoy AAPL stock.

Apple iPhone Growth Catalyst

India has become an important growth area for Apple Inc as the company does not have a significant smartphone market share in the country, leaving a lot of room to grow. Moreover, the iPhone sales from Greater China have been on a decline with the rise of local players like Xiaomi Corp and Huawei Technologies eating into Apple’s market share. This has been a key reason for Apple stock decline last year.

With the incoming of Donald Trump as the new president of United States, the company’s China problem has just become more serious, raising the concerns of AAPL stock investors. Considering expansion into countries like India looks like the right thing to do for Apple right now. Along with growth in Apple Services, if the company can grow its iPhone sales in growing markets like India, Apple stock shall keep its upward march intact and may even surprise the investors.