Loup Funds’ Managing Partner, and longtime Apple analyst, Gene Munster believes that Apple CEO Tim Cook will retire as soon as 2026.
Apple has meaningful China exposure. Apple’s business is more sensitive to the topic given our estimate that 75-80% of the company’s product sales, or 60-62% of overall sales, are “Made in China.” On top of that, 18% of Apple’s annual revenue comes from Greater China, essentially equal to the size of its Services business. Compared to other big tech companies, I believe that Apple has the most China exposure.
While it will take years, I believe that Apple is in the process of reducing its reliance on China. Apple thinks about its business in terms of decades, and in the end, I believe the company will be successful in building production and a strong user base outside of China… Tim Cook has decades of experience in navigating the political landmines that come with relying on a global supply chain. Based on that experience, I believe he sees the writing on the wall and the need to lessen exposure to the region.
Separately, I believe that Cook will write two more chapters as CEO of Apple. One on the new product category side, which will most likely be something in AR, health or auto. Second, a chapter on supply chain diversification. If you’re wondering, my guess is that Cook will retire between 2026-2028, based on his age (61 y/o) and option package. This would mean he has plenty of time to position the supply chain for the next decade.
MacDailyNews Take: So, if Munster is right, Cook & Co. have 4-6 years to lessen Apple’s product production in China, which Munster estimates is today responsible for some 75%-80% of Apple’s product production.
That’s too much. It’s always been too much. It’s obviously too much risk to be that dependent on any one country, especially one like China (Uyghur genocide, COVID, rampant IP theft, etc., etc., etc.)
Now, Apple was in dire straits when Cook came aboard in the late 1990’s and began the move headlong into China. That move helped to save Apple, so you can see why Cook has been so wedded to China ever since, but times change and it’s been clear to most for many years that Apple has too many of its eggs in one autocratic, capricious basket.
Perhaps COVID and the Chinese Communist Party’s increasingly quixotic responses to the disease they likely concocted and released (knowingly or unknowingly) finally jogged Cook out of his comfort zone. If so, silver lining.
Well, better late than never. Hopefully, Apple can put the pedal down and move production out of China as much as possible, greatly reducing Apple’s risk before Cook retires.
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