As we all saw in 2022, supply chain issues and soaring inflation hurt many businesses. Many large retailers have reported weaker profits due to the current macroeconomic challenges. This makes it even harder to figure out how to invest your money. The problems listed above are mostly indirect problems for companies such as Vodafone and Apple.
- After 4 years, Vodafone changes its CEO. Nick Read will hold the role until the end of the year.
- The situation with Apple in China and what this means for Apple’s stock.
Vodafone - The company has already started looking for a new president
Vodafone Group plc is a British multinational telecommunications company. The situation of Vodafone (VOD.PL) is not too good. After Read took the position, the company's shares fell almost 50% (45% to be exact). Stocks are at their lowest in two decades, according to data.
The company has already started looking for a new president, as the current one will remain in this position only until the end of the year.
Vodafone is also considering a merge with Hutchinson Three.
Foxconn, the Chinese iPhone supplier, is having production issues
Apple makes most of its devices in China. Recently, however, production is affected by many factors. Foxconn, the Chinese iPhone supplier, is having production issues. COVID-19 lockdowns in the area and employee-management dispute are major sources of problems.
Analysts predict these production issues could lead to a 5% to 10% drop in production.
Apple's situation is unique as the company relies on partner Foxconn Technology Group, a Taiwanese group that manages the facility to ensure that production runs as intended. If violent protests and lockdowns continue, production could be held back even more than expected.
According to analysts and people in the Apple supply chain, after a year of events that have weakened China's status as a stable manufacturing hub, the shock means that Apple is no longer comfortable.
The solution may be to move production to India. Analysts reported that by the end of 2022, Apple will transfer about 5% of the world's production of iPhone 14s there.
Apple and China have spent decades bonding in a relationship that has so far been mostly mutually beneficial. Change won't come overnight.
However, the transformation is already underway. In recent weeks, Apple Inc. accelerated plans to move some of its production outside of China, and to reduce reliance on Taiwanese assemblers led by Foxconn.
With a market capitalization of $2.33 trillion, Apple is still the world's largest publicly traded company. They also have $169 billion of liquidity on their balance sheet, but all of these production issues are causing investors concern. Analysts noted how much Apple relied on iPhone sales, which accounted for 52% of revenue. Experts also point out that if Apple continues to rely heavily on suppliers in China, it could become vulnerable.
As it became clear that manufacturing problems in China could pose a serious threat to supply, Apple shares began to fall. On December 2, Apple shares were down 18.79% year-to-date.
Source: reuters.com, forbes.com, wsj.com