Wedbush: Why Don Trump and Tim Apple are going to Austin

From a note to clients by analyst Daniel Ives that landed on my desktop Tuesday:

Tomorrow President Trump will visit Apple’s tech manufacturing facility in Austin, Texas along with CEO Tim Cook in what we would characterize as key strategic visit for the company. We note that in September Apple announced that it will commit to building its redesigned Mac Pro after securing tariff exemption on a majority of its requests from the Office of the US Trade Representative. Of these exemptions include partially assembled main circuit boards and graphics cards which contain chips from Intel, Nvidia, and AMD and we note that Apple uses Intel’s Xeon in its new computer.

This week’s visit by Trump speaks to the careful balancing act that Cook and Cupertino find themselves in around ramping up US production for some core products, while making sure its golden jewel iPhone manufacturing footprint in China with Foxconn remains teflon-like during this US/China trade battle.

Herein speaks to why Cook has become so crucial in these China negotiations, which appear to be heading down the path for a Phase 1 agreement, as Cupertino more than any company out there has the most to lose if this tariff war does not see a truce going forward and remains the poster child of this current trade situation.

My take: It’s all about the optics. For Dan Ives, who likes his metaphors, here’s a question: Does anybody really believe that Apple’s assembly plant in Austin is anything more than window-dressing?

5 Comments

  1. Aaron Belich said:

    Wait… what about NVIDIA hardware in Apple products!? Since when?

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    November 19, 2019
  2. Jerry W Doyle said:

    “…. My take: It’s all about the optics. For Dan Ives, who likes his metaphors, here’s a question: Does anybody really believe that Apple’s assembly plant in Austin is anything more than window-dressing?”

    There is merit in PED’s and Dan Ives take and question on the president’s scheduled visit to Apple’s Austin assembly plant. While Tim Apple has been effective at setting the table, he never has served the meal. Perhaps we should think about the words of caution from chess grand master Garry Kasparov: “…. Many politicians and pundits in the Free World seem to think that refusing to acknowledge you are in a fight means you can avoid losing it. But ignoring the reality of a conflict (trade) puts more innocents …instead of trained soldiers…on the front lines.”

    The American press, its CEOs and captains of industry must get beyond the mindset that China is a “friend” seeking peacefully trade with the USA all while many of these American commercial interests such as Boeing, Caterpillar, GE, General Motors, and other American businesses and industrial powerhouses are willingly transferring “dual use” technologies to China in exchange for the right to operate on Chinese soil. The “dual” in the “dual use” description means that these American technologies inevitably find their way into weapons pointed at US soldiers, sailors and pilots.

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    November 19, 2019
    • John Butt said:

      Yes, American arms producers can not afford peace

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      November 19, 2019
      • David Emery said:

        The tech is being stolen from arms producers. It’s the non-defense, high-tech and high-manufacturing companies whose technologies are being legally handed over to China.

        Perhaps the US doesn’t have to worry about military confrontation with China. Under pretty much any circumstance going forward, it does have to worry about economic confrontation. China has obtained (legally or illegally) IP worth literally trillions of dollars, it’s one reason why it was able to grow its GDP and manufacturing output so radically over the last 25-30 years.

        Now some economists might argue that is A Good Thing. Others will argue it puts the US at a significant disadvantage, since China not only takes our tech, but develops its own which it does not share.

        But pretending this is not a critical issue going forward is like being an ostrich with one’s head in the sand (and one’s ass sticking up in the air.)

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        November 19, 2019

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