UBS examines whether these tech giants can improve their supply chains

Investing.com - In June, the United States and China pressed pause on their latest trade spat, with the detente notably including an end to a disagreement over the control of key exports.

While the U.S. moved to choke off the trade of valuable semiconductor technologies to China, Beijing had crimped the flow going the other way of rare earth materials -- which are critical components in everything from solar panels to electric vehicles.

The feud highlighted the level of influence supply chains can have in negotiations between modern-day superstates and how, for companies and investors, these fights can have massive consequences.

"Companies face ever-increasing complexity in their supply chains," analysts at UBS led by Paul Winter wrote in a note to clients.

"This complexity can pose a challenge to ensuring efficient operating performance of the business and can have negative consequences as geopolitical risk increases and technology evolves."

Along with the impact of recent government actions, businesses are now having to contend with sweeping changes to supply chains since the COVID-19 pandemic.

Following the widespread lockdowns caused by the virus and a series of factory shutdowns, companies struggled to fix vulnerabilities that had emerged around how they sourced items. Consultants and academics noted that many of these groups were faced with having to find new ways to adapt in the post-pandemic world.

Although its index of global supply chain pressure has eased since spiking during the height of the pandemic, the New York Federal Reserve has said that supply disruptions have become a "major challenge for the global economy."

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Against this backdrop, the UBS analysts assessed how businesses in multiple industries were equipped to improve their operating performance over the next three years through the simplification or re-optimization of their supply chains.

Out of the so-called Magnificent 7 mega-cap tech names that have driven U.S. stock market returns in recent years, the brokerage said iPhone-manufacturer Apple (NASDAQ:AAPL) has "no ability" to carry out this improvement. Electric carmaker Tesla (NASDAQ:TSLA), meanwhile, had "some ability" to improve, as did software giant Microsoft (NASDAQ:MSFT).

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