All American iPhones can be made outside China to escape the trade war

admin June 11, 2019

2 2 minutes read

All American iPhones can be made outside China to escape the trade war

With US iPhones now made in China, there has been a lot of concern for the growing trade war between the two countries. The worst case scenario would be a 25% tariff on iPhone coming into the United States, which would either push up prices, hurt Apple's bottom line or both.

But Foxconn has said that the iPhone could escape this fate, as fitter has enough capacity in other countries to deliver all American iPhones …

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Bloomberg quotes an older Foxconn-exec as Speaking at an investor briefing.

The Cupertino, California-based company's primary production partner has enough capacity to make all iPhones tied to the United States outside of China, if needed, according to a senior manager at Hon Hai Precision Industry Co. The Taiwanese contract manufacturer now makes most of the smartphones in mainland China […]

Hon Hai, also known as Foxconn, is the American giant's main production partner. It will fully support Apple if there is a need to adapt production as the US and Chinese trading partners become ugly and more unpredictable. Chairman and semiconductor division manager Young Liu told an investor briefing in Taipei on Tuesday.

"Twenty-five percent of our production capacity is outside of China, and we can help Apple meet the needs of the US market," says Liu, adding that it is now investing in India for Apple. "We have enough capacity to meet Apple's Demand. "

Liu even said that the yet fictitious Wisconsin factory could be a potential future alternative.

The company will respond quickly and rely on localized production in response to trade war, just as it anticipated the need for Building a base in the US state of Wisconsin two years ago, he said.

In April, Foxconn confirmed that it will begin mass production of iPhones in India this year, which is believed to be primarily aimed at serving the local market, and avoids Indian import tariffs, but it sounds like Foxconn would be able to increase capacity enough to mount American iPhones as well.

Rival Apple Product Mount Pega Belief is also believed to move some production of MacBook and iPads out of China this month.

Some Apple accessories are already taxed at 25% when they enter the US from China, with Apple absorbing this price.

If Foxconn is right, it does not resolve all of Apple's commercial war-related threats. It has been a growing movement in China to boycott Apple products in retaliation for US politics, and to talk about the Chinese government making life difficult for Apple.

Goldman Sachs recently warned that the worst case fall to Apple's bottom line could be a 29% drop in global performance. However, it is based on an extreme scenario in China that prohibits the sale of iPhones within the country. Apple CEO Tim Cook recently said he considers it unlikely that China would target Apple.

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