Recently, the U.S. government has imposed a new round of high tariffs on major trading partners such as China, Mexico, and Canada, triggering violent turmoil in global supply chains. The policy not only directly impacted well-known companies such as Apple and Tesla, but also had a profound impact on the "Big Seven," including Nvidia, Microsoft, Google's parent company Alphabet, Amazon and Meta Platforms. China Exportsemi will attempt to provide an in-depth analysis of how these tariffs affect the operations and market performance of major U.S. technology companies, and explore the strategies adopted by companies to address these challenges.
1. Apple: Supply chain blocked, stock price under pressure
Apple is highly dependent on manufacturing and assembly in China, where about 90 percent of its iPhones and most of its Mac and iPad products are made. The new tariffs have put Apple under significant cost pressure. Dan Ives, an analyst at Wedbush Securities, lowered Apple's 12-month price target to $250 from $325, calling the tariffs a "tariff apocalypse" that could force Apple to raise prices, affecting sales and profit margins. Apple shares fell nearly 16% in the days following the tariff news before falling another 3.7% to close at $181.46, near a one-year low.
Consumers have also reacted to potential price increases. The Wall Street Journal reported that many consumers snapped up iPhones before the tariffs went into effect to avoid possible future price increases. However, Apple has yet to make it clear whether it will pass on the increased costs to consumers.
Figure: Not only Apple and Tesla, but the tariff war is crushing the entire U.S. stock tech sector!
2. Tesla: Market competition has intensified, and brand image has been damaged
Tesla has also been severely affected by the tariff policy. The company faces stiff competition in the Chinese market from local brands such as BYD and Nio. In addition, CEO Elon Musk's tensions with the government have also had a negative impact on the brand's image. Analyst Dan Ives lowered Tesla's price target to $315 from $550, noting that Tesla's competitive pressure in the Chinese market has increased, and consumers may turn to local brands. Recently, Tesla's share price fell by 7%, further reflecting the market's concern about its prospects.
3. Nvidia: Supply chain adjustments and geopolitical risks
Nvidia, the world's leading maker of artificial intelligence chips, is also actively adjusting its supply chain in response to tariffs and geopolitical risks. CEO Jensen Huang said the company plans to manufacture hundreds of billions of dollars in chips and electronics in the United States over the next four years, reducing its reliance on Asian supply chains. This initiative aims to reduce the impact of tariffs on companies and improve the resilience of supply chains.
However, Nvidia is also facing competitive pressure from China. The rapid development of Chinese companies such as Huawei in the field of artificial intelligence chips poses a threat to Nvidia's market share. In addition, the Chinese government's export restrictions on critical minerals, such as gallium and germanium, could further exacerbate supply chain tensions.
4. Microsoft: The dual challenges of cloud services and hardware business
Microsoft, a global tech giant, has also been affected by tariffs on its hardware products and cloud services. While Microsoft's main revenue comes from software and services, its Surface line of hardware products is manufactured in China, and tariffs could lead to higher production costs. In addition, the global economic slowdown may lead to a decrease in enterprise spending on cloud services, affecting Microsoft's Azure business growth.
5. Alphabet: The dual challenges of advertising revenue and hardware business
Google's parent company, Alphabet, relies heavily on advertising revenue, but its hardware products, such as the Pixel phone and Nest series, are produced in China, and tariffs could raise the cost of these products and affect profit margins. In addition, the global economic slowdown may cause advertisers to cut budgets, further impacting Alphabet's revenue.
6. Amazon: Rising logistics costs and private label impacts
Many of Amazon's private label products, such as electronics and home goods, are made in China. Tariffs will raise the cost of these products, potentially leading to higher selling prices or lower profit margins. In addition, Amazon relies on a global logistics network, and tariffs and trade barriers can increase logistics costs and affect overall operational efficiency.
7. Meta Platforms: Indirect impact of hardware and advertising
Meta Platforms (formerly Facebook) generates its main revenue from advertising, but its hardware products such as Oculus virtual reality devices are produced in China, and tariffs could raise production costs. In addition, global economic uncertainty may cause advertisers to reduce their advertising budgets on social media platforms, which indirectly affects the company's advertising revenue.
8. Supply Chain Diversification: Strategies for Companies
In the face of tariffs and geopolitical risks, many tech companies are looking to diversify their supply chains to reduce their dependence on a single country. Apple, for example, is increasing its share of production in India and Vietnam, while Nvidia plans to expand its production capacity in the United States. However, these adjustments require a significant investment of time and money, and it is difficult to completely eliminate supply chain risks in the short term.
9. Conclusion
The turmoil in the global supply chain has had a wide-ranging and far-reaching impact on U.S. tech giants. Tariffs not only increase the operating costs of companies, but also force them to reassess and adjust their supply chain layouts.
