After a sweeping look at global trade shifts, JPMorgan strategists have concluded that some of Apple’s Chinese suppliers could benefit from the trend of supply chain diversification. The Oct. 18 report looked at 10 aspects of “the great supply chain relocation and the rise of trading blocs.” The analysis ranged from China’s dominance in the global supply chain and overcapacity concerns, to U.S. policy. U.S.-China tensions and talk of “decoupling” emerged during Donald Trump’s first term as president. Calls for supply chain diversification picked up during the Covid-19 pandemic. Republican nominee Trump has threatened 60% tariffs on China if he is reelected as president next month. Democratic nominee Kamala Harris is expected to maintain the Biden administration’s tough stance on Chinese tech, and calls for high-end manufacturing to return to the U.S. “Tariff war 2.0 would also likely accelerate the pace of global supply chain relocation,” the JPMorgan analysts said. “Our EM equity strategy team highlights some of the MSCI EM companies (from India, ASEAN and Mexico), which could be potential beneficiaries of supply chain relocation and growth of the manufacturing sector in the respective markets,” the report said. “Further, they highlight names that could benefit from Apple’s supply chain relocation,” the report said. Apple plans to increase production of iPhones in India , while some of its China suppliers have invested in factories overseas. The analysts’ list of supply chain diversification beneficiaries included three names traded in mainland China: Wingtech Technology, Luxshare Precision Industry and GoerTek. JPMorgan rates Wingtech and Luxshare overweight, while its neutral on GoerTek. The three companies already manufacture in many parts of the world outside of China, according to their websites. Apple’s latest supplier list show the company is buying from GoerTek and Luxshare in Vietnam as well as China. A supplier list from a prior year showed Apple bought from Wingtech’s factories in Malaysia and the Philippines. The latest version only listed Wingtech’s China operations. Other Chinese suppliers have expanded business abroad along with their customers. Shenzhen-based smartphone company Oppo said when it opened its factory in Indonesia, it helped around 10 of its suppliers move there as well. Chinese companies’ overseas revenue has grown over the last few years, and a portfolio of companies with high overseas sales exposure has generated 9.5% annualized alpha from 2019 to 2023, Bernstein analysts said in their report this month on China’s global manufacturing development. “This, we believe, is going to be a key source of return for investors going forward as Chinese companies go global and leverage their low-cost, high-quality product strategy outside China,” the analysts said. Apple supplier Luxshare is also one of their top picks. Bernstein rates the stock outperform with a price target of 50 yuan ($7.02), 15% above where shares closed Friday. Luxshare “has a sizable site in Vietnam involved in the assembly of Apple wearables and non-Apple business. The overseas capacity represents ~25% of Luxshare’s overall capacity,” the Bernstein analysts said. For Apple’s iPhone, however, the Bernstein analysts are less optimistic that India can become a viable alternative to China. They expect Luxshare to gain share in the smartphone’s assembly in China. Apple is scheduled to release quarterly results on Oct. 31. — CNBC’s Michael Bloom contributed to this report.
Ken Griffin, chief executive officer and founder of Citadel Advisors LLC, speaks during an Economic Club of New York event in New York, US, on Thursday, Nov. 21, 2024.
Yuki Iwamura | Bloomberg | Getty Images
Citadel CEO Ken Griffin issued a warning against the steep tariffs President-elect Donald Trump vowed to implement, saying crony capitalism could be a consequence.
“I am gravely concerned that the rise of tariffs puts us on a slippery slope towards crony capitalism,” the billionaire investor said Thursday at the Economic Club of New York.
The Citadel founder thinks domestic companies could enjoy a short-term benefit of having their competitors taken away. Longer term, however, it does more harm to corporate America and the economy as companies lose competitiveness and productivity.
Crony capitalism is an economic system marked by close, mutually advantageous relationships between business leaders and government officials.
“Those same companies that enjoy that momentary sugar rush of having their competitors removed from the battlefield, soon become complacent, soon take for granted their newfound economic superiority, and frankly, they become less competitive on both the world stage and less competitive at meeting the needs of the American consumer,” Griffin said at the event.
Trump made universal tariffs a core tenet of his economic campaign pitch, floating a 20% levy on all imports from all countries with a specifically harsh 60% rate for Chinese goods.
The protectionist trade policy could make production of goods more expensive and raise consumer prices, just as the world recovers from pandemic-era inflation spikes.
“Now you’re going to find the halls of Washington really filled with the special interest groups and the lobbyists as people look for continued higher and higher tariffs to keep away foreign competition, and to protect inefficient American businesses have failed to meet the needs of the American consumer,” Griffin said.
At the same event, Griffin also said that he’s not focused on taking Citadel Securities public in the foreseeable future. Citadel is a market maker founded by Griffin in 2002.
“We’re focused on building the business, on investing in our future. And we do believe that there are benefits to being private during this period of very, very rapid growth,” he said.
Check out the companies making headlines in midday trading. Nvidia — Shares of the chipmaker dipped about 1% in midday trading, after gyrating earlier in the session. Nvidia beat on top and bottom lines for the third quarter, posting adjusted earnings of 81 cents per share on revenue of $35.08 billion. Analysts polled by LSEG had called for earnings of 75 cents per share on $33.16 billion in revenue. Nvidia also gave a better-than-expected forecast for the current quarter. Baidu — U.S. shares of the Chinese search engine fell about 5% after Baidu’s third-quarter revenue declined by 3% compared to the year-ago period . Still, the company posted a 12% increase in its non-online marketing revenue, fueled mostly by growth in its artificial intelligence cloud business. Alphabet — Shares declined 5% on news that the Department of Justice is pushing a federal judge to force Google divest its Chrome internet browser in order to create a more level playing field for competitors in the search industry. That follows a ruling in August that Google has a monopoly in the search market. Snowflake — The data analytics software maker saw shares skyrocket more than 34%, after the company’s better-than-expected third-quarter results . The stock is heading for its best day ever. Snowflake also called for $3.43 billion in fiscal 2025 product revenue, implying 29% growth. CEO Sridhar Ramaswamy said Snowflake is focusing more on saving money. Merus — Shares of the cancer therapeutics company gained nearly 4%. Goldman Sachs initiated coverage of Merus with a buy rating, saying it sees big gains ahead driven by the company’s cancer treatment. Netflix — Shares rose nearly 2% on the heels of Bank of America reiterating its buy rating on the stock and upping its price target to $1,000. The bank cited live events, as well as Netflix’s in-house ad tech platform, as catalysts for growth. Crypto-related stocks — Stocks tied to cryptocurrencies earlier rose after the price of bitcoin crossed $98,000 for the first time , but they fluctuated after Galaxy Digital CEO Michael Novogratz warned that a pullback in bitcoin will come eventually. MicroStrategy was down 1%, reversing its earlier gains, while Coinbase dipped 3%. Miner Mara Holdings gained nearly 10%, while trading platform Robinhood dipped about 1%. BJ’s Wholesale Club — Shares moved 9% higher after the warehouse club’s third-quarter adjusted earnings beat the Street’s estimates. BJ’s also boosted its full-year guidance. The company said it will increase its membership fee and announced plans to repurchase $1 billion shares. PDD Holdings — Shares of the e-commerce giant, which owns Temu, fell 9.7%. PDD missed profit and revenue estimates. — CNBC’s Sean Conlon, Yun Li and Michelle Fox contributed reporting.
Rohit Chopra, director of the CFPB, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress,” in the Dirksen Building on Nov. 30, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services likes payments and wallet apps.
Tech giants and payments firms that handle at least 50 million transactions annually will fall under the review, which is meant to ensure the newer entrants adhere to the laws that banks and credit unions abide by, the CFPB said in a release. That would include popular services from Apple and Google, as well as payment firms like PayPal and Block.
While the CFPB already had some authority over digital payment companies because of its oversight of electronic fund transfers, the new rule allows it to treat tech companies more like banks. It makes the firms subject to “proactive examinations” to ensure legal compliance, enabling it to demand records and interview employees.
“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” said CFPB Director Rohit Chopra. “The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”
A year ago, the CFPB said it wanted to extend its oversight to tech and fintech companies that offer financial services but that have sidestepped more scrutiny by partnering with banks. Americans are increasingly using payment apps as de facto bank accounts, storing cash and making everyday purchases through their mobile phones.
The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, and have gained “particularly strong adoption” among low- and middle-income users, the CFPB said on Thursday.
“What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families, and businesses,” the regulator said.
The initial proposal would’ve subjected companies that process at least 5 million transactions annually to some of the same examinations that the CFPB conducts on banks and credit unions. That threshold got raised to 50 million transactions in the final rule, the agency said Thursday.
Payment apps that only work at a particular retailer, like Starbucks, are excluded from the rule.
The new CFPB rule is one of the rare instances where the U.S. banking industry publicly supported the regulator’s actions; banks have long felt that tech firms making inroads in financial services ought to be more scrutinized.
The CFPB said the rule will take effect 30 days after its publication in the Federal Register.