Richard Kramer

It's certainly top of mind for investors. And I think the debate has shifted from the direct impact of tariffs. If you'd said a month ago that it would be a 1% hit on Apple's total sales for the June quarter, you would have said, ha, no problem, I'm delighted with that. But what it has now shifted the debate towards is the fears of a either mild or catastrophic US recession.

It's certainly top of mind for investors. And I think the debate has shifted from the direct impact of tariffs. If you'd said a month ago that it would be a 1% hit on Apple's total sales for the June quarter, you would have said, ha, no problem, I'm delighted with that. But what it has now shifted the debate towards is the fears of a either mild or catastrophic US recession.

So it's a recognition that the world has these interconnected supply chains, and Apple is showing that it has anticipated this issue by the comments it made about the India share of U.S. smartphone sales.

So it's a recognition that the world has these interconnected supply chains, and Apple is showing that it has anticipated this issue by the comments it made about the India share of U.S. smartphone sales.

You know, again, just like these words disruption and pivot, I think they sound great. But when you're running a $400 billion business, you know, it is the proverbial supertanker and you don't just sort of do a U-turn. So there will be a long-term concerted effort to build up additional supply coming out of markets like India and build the tertiary supply chain around the assembly factories.

You know, again, just like these words disruption and pivot, I think they sound great. But when you're running a $400 billion business, you know, it is the proverbial supertanker and you don't just sort of do a U-turn. So there will be a long-term concerted effort to build up additional supply coming out of markets like India and build the tertiary supply chain around the assembly factories.

And then behind that, same thing has happened for Macs and iPads and AirPods and so forth in Vietnam and other locations. But again, replicating that deep supply chain that you have in China is not something you can do in a matter of months in reaction to a tariff announcement. It's a multi-years project.

And then behind that, same thing has happened for Macs and iPads and AirPods and so forth in Vietnam and other locations. But again, replicating that deep supply chain that you have in China is not something you can do in a matter of months in reaction to a tariff announcement. It's a multi-years project.

A little history here. If you go back even a decade or more, Nokia had one of the largest mobile phone manufacturing plants in the world in India. They had a huge market share in the India market. Obviously, Nokia is really no more in the smartphone space. That plant was taken over by Foxconn, the leading ODM production partner for Apple. They have built up that capacity for Apple in India.

A little history here. If you go back even a decade or more, Nokia had one of the largest mobile phone manufacturing plants in the world in India. They had a huge market share in the India market. Obviously, Nokia is really no more in the smartphone space. That plant was taken over by Foxconn, the leading ODM production partner for Apple. They have built up that capacity for Apple in India.

principally initially to serve the Indian domestic market and to avoid import duties there. And they now can produce the full range of Apple iPhones that sell into the US market. Now, Cook didn't talk about which phones were going into the US market. It is, again, the majority, which means it may be a low quarter and they get just over half of the phones.

principally initially to serve the Indian domestic market and to avoid import duties there. And they now can produce the full range of Apple iPhones that sell into the US market. Now, Cook didn't talk about which phones were going into the US market. It is, again, the majority, which means it may be a low quarter and they get just over half of the phones.

And clearly, when they ramp towards the all important Christmas selling season where volumes are 40 or 50 percent higher than they are in the other quarters, that may be a tougher ask. But unsurprisingly, he did not want to be drawn what the tariff situation is going to be in July, much less what's going to happen in September and December.

And clearly, when they ramp towards the all important Christmas selling season where volumes are 40 or 50 percent higher than they are in the other quarters, that may be a tougher ask. But unsurprisingly, he did not want to be drawn what the tariff situation is going to be in July, much less what's going to happen in September and December.

And, you know, these things seem to have a habit of changing almost by the day.

And, you know, these things seem to have a habit of changing almost by the day.

Yeah, I mean, there is certainly an element for the entire market of whistling past the graveyard, right? At the same time, if we go back to look at what happened during the COVID pandemic era, big tech stayed the course with its investments. It kept spending on R&D and CapEx and came out with increased market share and market power and indeed market cap.

Yeah, I mean, there is certainly an element for the entire market of whistling past the graveyard, right? At the same time, if we go back to look at what happened during the COVID pandemic era, big tech stayed the course with its investments. It kept spending on R&D and CapEx and came out with increased market share and market power and indeed market cap.

There is certainly an element for the entire market of whistling past the graveyard, right? At the same time, if we go back to look at what happened during the COVID pandemic era, big tech stayed the course with its investments and came out with increased market share and market power and indeed market cap.

There is certainly an element for the entire market of whistling past the graveyard, right? At the same time, if we go back to look at what happened during the COVID pandemic era, big tech stayed the course with its investments and came out with increased market share and market power and indeed market cap.

And that's why everybody around the world knows about the MAG-7 now. So I think these companies have a unique ability, especially given the $300 billion to $400 billion of net cash balance they're sitting on, of duration in their business models. The Apple iPhone replacement cycle is four years. Gosh knows how long the average Microsoft software installation is.

And that's why everybody around the world knows about the MAG-7 now. So I think these companies have a unique ability, especially given the $300 billion to $400 billion of net cash balance they're sitting on, of duration in their business models. The Apple iPhone replacement cycle is four years. Gosh knows how long the average Microsoft software installation is.

We've all been using these Google and Meta services for a decade or more now, and they passed the toothbrush test of using them twice a day or more. So these companies are very willing to invest through down cycles to come out better on the other end.

We've all been using these Google and Meta services for a decade or more now, and they passed the toothbrush test of using them twice a day or more. So these companies are very willing to invest through down cycles to come out better on the other end.

And I think now the question that will be asked across the entire S&P 500 is how many companies have that stability and duration in their business model and have the sheer resources of big tech. And that's why Mark Zuckerberg can say, well, our CapEx isn't going to be 60 to 65 billion because it might cost a little more. We'll spend up to 72.

And I think now the question that will be asked across the entire S&P 500 is how many companies have that stability and duration in their business model and have the sheer resources of big tech. And that's why Mark Zuckerberg can say, well, our CapEx isn't going to be 60 to 65 billion because it might cost a little more. We'll spend up to 72.

And no one bats an eyelash because they know Meta can generate that much in free cash flow in a given year.

And no one bats an eyelash because they know Meta can generate that much in free cash flow in a given year.

Thank you so much for having me.

Thank you so much for having me.