The continued search for iPhone production outside China
So it seems that two of Apple’s biggest contract manufacturers are looking to expand outside China.
Foxconn continues to invest in India – where it currently assembles smartphones for Xiaomi, Huawei and Oppo – and announced over the weekend that it had bought land rights in Vietnam.
Another Apple contractor, Pegatron – which accounts for almost a third of Apple’s assembly orders – said yesterday that it was planning to build production capacity in Indonesia, Vietnam and India.
I think that all of this is great news for Apple which I think for too long has been over-exposed to China and this latest trade war spat has served to highlight this fact. I get the feeling that the Chinese government aren’t going to be that keen on giving Apple a helping hand in their own back yard given their own players in the mobile phone space, so Apple is better off concentrating on India in my opinion.
If it can rejig production to make handsets cheap enough to sell there I think that there could be huge upside potential given the super-low penetration of smartphones in the Indian market.
A potential tie-up between Marks & Spencer and Ocado
The second thing I wanted to talk about today was a potential tie-up between Marks & Spencer and Ocado. Talks are in the very early stages at the moment so everyone is trying to second-guess what the outcome will be.
Some are guessing that Marks & Spencer could potentially buy Ocado’s distribution network including warehouses and vehicles which will leave Ocado with the tech part of the business where it licences out its systems and software capability to other retailers.
The success in this part of the business has powered this retailer into the FTSE 100 and is thought to have tremendous potential given the deals it has signed with France’s Casino and America’s Kroger.
I suspect this is something that would be good for both parties as Marks & Spencer’s online business has fallen behind competitors – so anything that would improve this would be well-received – and investors will probably welcome the ability to focus on Ocado’s licensing business as a purer play unsullied by all that competitive food grocery nonsense.
However, as I said earlier, talks are at an early stage and there are no details forthcoming. Watch this space – as it could get quite exciting.