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Reports suggest that Foxconn’s Zhengzhou city plant is almost back to full capacity. However, Apple (NYSE: AAPL) stock is trading lower in early price action today amid concerns over iPhone demand.

Apple stock underperformed the S&P 500 in 2022 amid fears of production snags. Reports of Foxconn’s plant also known as iPhone city resuming near-normal production should have helped lift the stock. However, Apple is instead in the red and has hit its 52-week lows.

Foxconn’s Zhengzhou city plant produces the bulk of iPhones. Last year when there was a COVID-19 outbreak at the plant, Apple issued a statement warning that its sales in the current quarter would be hit due to the production issues at the plant.

Due to the production issues at the plant, the wait times for some iPhone 14 models increased. During the holiday season, several buyers complained about not being able to buy the iPhone 14.

Now, reportedly the plant is nearing normal production and reached 90% of the planned production capacity towards the end of the last month.

Apple Stock Falls Despite Reports of Foxconn Nearing Normal Production Levels

Reports suggest that Foxconn helped cajole Chinese leadership to relax the stringent zero-COVID policy as it was negatively hurting China’s image as an export hub. Amid massive protests including at Foxconn’s iPhone city, China eventually relented and gradually relaxed many restrictions.

Meanwhile, even as Foxconn’s production has reached near-normal levels, reports suggest that Apple is looking to cut production amid weak demand. The slowing economy and high inflation have taken a toll on the sales of gadgets also.

Apple’s price action on the first trading day of 2023 is in stark contrast to the last year. Today, Apple’s market cap fell below $2 trillion. On the first trading day of 2022, the company’s market cap hit $3 trillion and it became the first company to achieve that feat.

AAPL Was the Best Performing FAANG stock of 2022

Apple stock lost around 28% last year but was still the best-performing FAANG stock of the year. While its losses exceeded that of the S&P 500, it outperformed the Nasdaq Composite Index—the only FAANG to do so in 2022.

Apple lost $846 billion in market cap and was the biggest loser in terms of market cap. Amazon was a close second and lost $834 billion in market cap. However, from its 2021 peak, Amazon has lost over $1 trillion.

It is the only company to lose over $1 trillion in market cap. After the crash today, Apple has also joined the dubious club.

Apple is Looking to Diversify Its Production

Apple is planning to diversify its sourcing to countries like India and Vietnam. India is offering incentives to electronics manufacturers as the country seeks to capitalize on the “China plus one” sourcing strategy that many US companies are contemplating.

Indian stocks outperformed global markets in 2022 amid a strong domestic economy. We have a guide on how beginners can buy stocks in India with a regulated broker.

Meanwhile, Apple wouldn’t find it easy to diversify from China given the country’s impeccable manufacturing ecosystem, which is tough for other countries to emulate. Counterpoint Research believes that Apple would take years to diversify its production away from China.

All said, most analysts believe that Apple stock should rebound and find it a good buy for the long term. It’s the favorite stock of Warren Buffett as well, and the Oracle of Omaha added more AAPL shares in 2022. We have a guide on buying Apple stock.

However, for now, concerns over slowing iPhone demand are taking a toll on Apple stock. Tesla is also trading sharply lower today after the company missed Q4 delivery estimates.

Meanwhile, SpaceX, another Elon Musk-run company is reportedly looking to raise $750 million at a valuation of $137 billion.

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