Analyst: Lower iPhone production cost may help Apple absorb 10% tariff

JP Morgan believes that Apple may be able to help offset the impact of December’s tariffs on the iPhone due to lower production costs as the bill of materials per iPhone said to be lower for the upcoming 2019 models than for previous versions.

Malcolm Owen for AppleInsider:

The ongoing trade war between the United States and China has, so far, not affected the iPhone, though one threat of a 10% tariff directly affecting electronics like the iPhone was close to being implemented, before being delayed until December.

In a note to investors seen by AppleInsider, JP Morgan believes the primary lever for Apple to adjust the impact of the cost of the tariff is the production cost of the iPhone itself. Analysts believe the bill of materials has been reduced by between $30 and $50 per 2019 iPhone, which will enable Apple to absorb a large portion of the tariffs without affecting its US retail prices… There has been some speculation by Apple analyst Ming-Chi Kuo that the company would absorb the cost of any tariffs…

MacDailyNews Take: So, with a lower bill of materials per iPhone, Apple may be able to absorb tariff impact without incurring much, if any, hit to iPhone margins.

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