Tech News
Writer - Divye Gandhi
Apple has now come out and said they are considering or at least the reports state that they are considering moving iPhone production out of China or at least the percentage of it. So what does this mean in conjunction being a bad news on this one front, you now also have the potential of increase in already sky-scraping end user prices for the premium and off the smartphone business like iPhone if they have to move some production out of China to avoid the tariff which is being discussed so frequently you could see an increase in the cost per unit on an iPhone as well.
So the tariff proposal was 25% right tariff on goods originating from China. Show the suggestion is apparently Apple has asked their suppliers to probably Mull over the idea of potentially moving , transplanting some of that production to other places. Primarily in Southeast Asia we could see places like Vietnam and India become a player as have been observed in newly made iPhone 6s and iPhone SE. Certain Samsung devices are also manufactured there in Vietnam. So you get outside the Mainland China, you avoid the tariff, you keep the price down but moving operation could incur other expenditures , which could still result in increase to your bottom-line if you are an iPhone buyer . In fact analyst have forecasted the iPhone cost to increase by 14% as a result even though Tim Cook said it isn’t gonna happen, may be apple just absorbs some of that extra cost and just chops it out of there margin we know they protect fairly healthy margins, maybe they could do that but non the less this entire ecosystem becoming more complex. You have softness on the demand standpoint , you have more selection from a wider variety of brands at different price points and now you have the potential increase in complexity in getting these premium devices sold because of the potential for this tariff situation.
And it could go in reverse as well. Of course if this tariff does come in to play on another soil you could potentially have a Chinese retaliation in which case apple could then have more expensive product even in mainland china because of some bottlenecked technologies that exist and the fact that money eventually finds its way back to apple.
About 5 Million Chinese jobs are brought to there end on apples manufacturing in the country already and apple employs around ten thousand people in china. Its unclear how much more jobs will be impacted by loosing 20-30% of production. Now apple is apparently the one, the story is that they have asked if it would be possible to move a percentage of there production outside of china to diversify there manufacturing , resources and so forth. But Foxconn on the other hand whose responsible for manufacturing the iPhones, they are saying they could move all of it at least for US destined devices. They say “we could do that no problem”. So you are getting a similar message from both sides, the manufacturing side with Foxconn and also apple themselves. So there is a likelihood here that you could see a more expensive iPhone coming in the near future.
Thank you
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