The release of the iPhone 6 should contribute more to the nation’s exports and economic growth than to China’s in the coming months, because of Taiwan’s superior position in Apple Inc’s supply chain, Bank of America Merrill Lynch said.
Though iPhones are a US product, they are assembled in China and — except those sold in China — are counted as Chinese exports, Bank of America-Merrill Lynch economist Ting Lu (陸挺) said.
The iPhone 6 is also important to Taiwan’s economy, which supplies a significant amount of iPhone components, including processors, Lu said.
“We thus think that Taiwan’s exports will also be lifted when these valuable components are shipped to China or other assembly locations,” Lu wrote in a note to clients on Monday.
Merrill Lynch projected that the release of the iPhone 6 could add about 1 percent per month to China’s export growth for the rest of this year and boost Taiwan’s by about 2 percent per month until October. In the period from November to January, the iPhone 6 could contribute about 1 percent per month to Taiwan’s export growth, the bank said.
A increase of 1 to 2 percentage points in exports is “no small matter,” given that China’s export growth was 4.9 percent year-on-year in the second quarter, while Taiwan’s was 4.4 percent, Lu said.
However, despite the hefty export contribution of iPhones, China is little more than a low-end assembly line in the iPhone value chain.
Lu estimated that manufacture of the iPhone 5S in China contributes only about US$8 per unit to the country’s GDP and that the iPhone 6 might contribute just a bit more.
Taiwan’s case is different because the manufacture of iPhone 6 components contributes about US$25 per unit to Taiwan’s GDP, Lu said, forecasting that the iPhone 6 would contribute about 0.4 percentage points to Taiwan’s GDP growth this year.
Merrill Lynch has projected that a 4.7-inch model of the iPhone 6 will go on sale at the end of the month after its expected unveiling on Tuesday next week, and an expected 5.5-inch model would become available in December.
The bank forecast iPhone shipments of 37 million units in the third quarter and 63 million units in the fourth quarter, up 8.8 percent and 23.5 percent year-on-year respectively.