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Apple (AAPL) to Reopen iPhone Manufacturing Factory in India

Apple's (AAPL) key manufacturing partner Foxconn will reopen the iPhone manufacturing facility in India after addressing the Labor Law Violation issues

This story originally appeared on Zacks

Apple AAPL recently addressed one of its supply chain constraints stemming from Labor Law Violations in India. In December, Apple put its key manufacturing partner Foxconn’s factory in India on probation amid worker protests and an investigation that revealed substandard living conditions.

Foxconn is set to reopen the iPhone manufacturing facility located in the town of Sriperumbudur town near Chennai on Jan 12.

Per a Reuters report, Foxconn will reopen the iPhone manufacturing facility with 500 workers, government officials and a legislator in the region.

Foxconn is keen to gradually resume production at full force; however, when the rest of the 17,000 workers will be called back hasn’t been disclosed yet.

- Zacks

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

iPhone Drives Apple’s Prospects

Apple has achieved yet another milestone by becoming the first company to hit $3 trillion market capital, thanks to the strong demand for iPhone.

Apple is reportedly planning to mass produce iPhone 13 in India beginning February 2022. Expansion of its manufacturing hub in India is anticipated to boost Apple’s supply of iPhones. It is estimated that 20-30% of iPhones produced in India will be exported. It will bolster the supply of the iPhone 13, which has garnered significant demand in the local market.

However, labor violation issues can put these plans in jeopardy. The pandemic-induced chip shortage and supply chain constraints are already costing Apple billions of revenues ($6 billion in fourth-quarter fiscal 2021). Labor violation issues that halted production affect Apple’s capability to meet demand, which in turn might impact revenues further.

Reportedly, Apple has lowered its iPhone production target for the fourth quarter. Per Investors Business Daily, Mizuho Securities analyst Yasuo Nakane lowered his estimates for iPhone production in the fourth quarter to 90 million units from 95 million — a production decrease of 4% year over year.

However, in the first quarter of 2022, Nakane anticipates Apple to make 66 million iPhones, up 20% year over year. Meanwhile, the same for the full year of 2022 is expected at 259 million iPhones, reflecting an increase of 9%.

Apple’s Share Price Continues to Soar

Markedly, Apple has been outperforming its Computer-Mini-Computer industry peers 3D Systems DDD and Lenovo LNVGY. However, HP HPQ has been a better-performing stock in the same industry over the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Apple, which currently carries a Zacks Rank # 2 (Buy), have appreciated 33.5% in the past year. The Zacks Consensus Estimate for 2022 earnings has moved upward by a nickel in the past 60 days to $5.82 per share.

3D Systems’ shares have declined 28.1% in the past year. The Zacks Consensus Estimate for 2022 earnings has been moved downward by 4 cents in the past 60 days to 21 cents per share.

Lenovo shares have appreciated 20.9% in the past year. The consensus mark for 2022 earnings is pegged at $3.24 per share unchanged over the past 60 days.

HP shares have surged 49.9% in the past year. The Zacks Consensus Estimate for 2022 earnings has moved upward by 13 cents in the past 60 days to $ 4.16 per share.

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