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<Research>BOCI: Tariff War Hits Apple Supply Chain Hard, but Has Minimal Impact on XIAOMI-W Operations
Recommend 20 Positive 47 Negative 21 |
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Technology products are under greater influence of the current tariff war, BOCI stated. While approximately 9.95% of U.S. exports to China in 2024 consisted of integrated circuits and semiconductor equipment, about 41.45% of China’s exports to the U.S. in the same period were mechanical and electronic products. Apple (AAPL.US) is among the most directly affected companies, with its supply chain being hit hard. Apple’s supply chain is heavily concentrated in Asia. More critically, if iPhones produced in China are subject to a 54% U.S. tariff, demand for iPhones in the U.S. could be hampered. In contrast, the tariffs imposed by China are expected to have a more manageable effect on the tech industry. This is primarily because prior stringent U.S. export restrictions on Chinese semiconductors and AI-related high-tech products have better prepared China’s supply chain. Additionally, many U.S. products are not manufactured in the U.S., making them largely immune from Chinese tariffs. The broker anticipated that China’s domestic semiconductor supply chain will remain a key beneficiary. Although XIAOMI-W (01810.HK) has seen its stock price retreat since its recent USD5.5 billion share placement and an intelligent driving-related car accident, the broker predicted the ongoing tariff war has minimal impact on Xiaomi’s operations. Firstly, aside from certain IoT products sold through North American distributors, Xiaomi’s revenue exposure to the U.S. has been consistently low, estimated by BOCI at less than 1% of total revenue. Secondly, while Xiaomi relies on U.S.-designed components such as SoCs, intelligent driving chips, storage chips, RF front-ends, and power ICs, most of these are produced outside the U.S. and thus unbothered by Chinese tariffs. Therefore, if the tariff war remains limited to unilateral measures against the U.S., the broker viewed any further price declines as buying opportunities. Within its coverage, the broker considered Xiaomi to have the strongest structural growth while facing limited negative impacts from the tariff war. Xiaomi remains the broker’s sector top pick. AAStocks Financial News |
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