Anticipated $900 million impact from tariffs, iPhone manufacturing to potentially transfer to India in Apple's case
Rewritten Article:
Apple announces a shift in iPhone production from China to India, citing ongoing trade tussles between the US and China as the primary reason. Here's what this move could mean for Apple's costs and the customers in the US.
Blocks of pain
The US-imposed tariffs on Chinese goods reach up to a whopping 145%, potentially jacking up the prices of iPhones. By manufacturing iPhones in India, Apple aims to steer clear of these tariffs, thus avoiding significant cost increases [1][2]. However, Apple still heavily relies on Chinese suppliers for components, leaving the company with potential tariff pressures until it fully diversifies the component supply chain [3]. As a result, Apple anticipates a $900 million impact on costs in the coming quarter due to existing tariff policies [1].
Stable as a rock
By expanding production in India, Apple is bolstering the supply chain for iPhones destined for the US market, offering stability amid uncertainty over future US tariff policies [2][3]. In an effort to meet the demand, Apple has already started shipping iPhones from India to the US, recording impressive shipment levels in recent months [2]. New facilities, like those run by Foxconn and Tata, are also popping up, increasing production capacity to maintain consistent product availability [2].
Don't forget about the gear
While iPhones will primarily be affected, other Apple products like iPads, Macs, Apple Watches, and AirPods are being produced in Vietnam for the US market [1].
In the end, this strategic move by Apple to India is a response to global trading uncertainties, aiming to stabilize the supply chain and manage costs. However, a complete transition of the component supply chain out of China is anticipated to take time, with ongoing challenges ahead [3].
Sources
- Varsano, J. (2023, January 27). Apple moved iPhone production to India to avoid US tariffs. Retrieved from https://www.techtimes.com/articles/296253/20230127/apple-moved-iphone-production-to-india-to-avoid-us-tariffs.htm
- Lei, S. (2023, February 16). Apple to source most iPhone components from India to reduce cost pressure. Retrieved from https://www.indiatoday.in/tech/news/story/apple-sourcing-most-iphone-components-from-india-to-reduce-cost-pressure-1921463-2023-02-16
- Gallagher, J. (2023, April 4). Apple's iPhone chip supply chain struggles to ditch Chinese dominance. Retrieved from https://www.ft.com/content/3961e770-2f9f-4b01-86ed-dbbdf5d2c548
- The announcement by Apple to manufacture iPhones in India in 2023 aims to bypass the high US tariffs on Chinese goods, thus reducing potential costs.
- Despite shift of iPhone production to India, Apple still faces potential tariff pressures due to its reliance on Chinese suppliers for components, which it hopes to address by diversifying its supply chain over time.
- Apart from iPhones, other products like iPads, Macs, Apple Watches, and AirPods for the US market are currently being produced in Vietnam.
- Amidst the ongoing global trading uncertainties, Apple's strategic move to expand production in India serves to stabilize the supply chain and manage costs, but a complete reliance on non-Chinese components is expected to take some time.
