Apple suppliers consider moving iPhone assembly out of China if U.S. import tariffs skyrocket

“Apple Inc.’s suppliers will consider shifting iPhone production away from China should tariffs on U.S. imports skyrocket, but the U.S. company plans to sit tight for now, people familiar with the company’s thinking said,” Debby Wu reports for Bloomberg.

“The tech giant’s suppliers intend to stick with the existing model even if the U.S. levies a 10 percent import tariff on smartphones, the people said, asking not to be identified talking about a private matter,” Wu reports. “But it will have to reassess the situation should U.S. President Donald Trump decide on a more punitive 25 percent, the people said.”

“Apple has long used the world’s No. 2 economy as its production base for everything from its signature device to iPads and Macs. The company’s supply chain now spans hundreds of companies, culminating in assemblers such as Hon Hai and Pegatron Corp.,” Wu reports. “An Apple partner has already suggested alternative locations for non-iPhone production, but the U.S. company has indicated there’s little need to make such a move for now, another person said. That may change if tariffs escalate, an outcome now in the balance as Washington and Beijing begin thorny negotiations on a trade deal that could scale back a series of tariffs implemented this year.”

“A 10-percent tariff could result in an earnings-per-share decline of just $1 for Apple, should all its hardware sold in the U.S. be subject to the levy and the company absorbs the cost, RBC analyst Amit Daryanani wrote in a Nov. 28 research note. That compares with the average 2019 Apple-EPS estimate of $13.32, according to data compiled by Bloomberg,” Wu reports. “However, a more severe scenario of a 25 percent tariff — absorbed by Apple — could result in an EPS decline of about $2.50, he added.”

Read more in the full article here.

MacDailyNews Take: If. Could. May Might. But.

“The people said.” Where, in a bar? Which “people asking not to be identified?” This is, after all, Bloomberg “Chinese Spy Chips” News.

Sowing more seeds of Fear, Uncertainty, and Doubt about Apple, Bloomberg is.

A U.S.-China trade deal would certainly be good news for the U.S.economy as a whole, along with full employment, rising wages, and consumer confidence, it’d certainly be excellent news for Apple, maker of coveted goods and services.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006

Apple supplier Hon Hai posts all-time November revenue record – December 11, 2018
Apple assembler Pegatron posts 43% YOY revenue growth for November – December 10, 2018
Wall Street set for strong open on President Trump’s upbeat U.S.-China trade comments – December 12, 2018
Morgan Stanley: Apple investors shouldn’t worry too much about China – October 18, 2018


      1. Today. Tomorrow, who knows?

        In 1939 the USA wasn’t geared up to build tanks and airplanes either. By 1943, no other nation could match the USA’s industrial manufacturing capacity.

  1. Why would China kowtow to Trump and make a trade deal? Trump is renowned the world over as the person who is “not-agreement-capable.” Meaning additionally that if he gets an agreement he will only stick with it as long as it benefits him.

    One only needs to look at Trump’s (large) history of trade agreement and treaty abrogations to know that any country that values its sovereignty will not enter into an agreement with him.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.