It is possible for Apple Inc to move iPhone production to America, but it would almost double the cost of making the device while creating logistical headaches, according to Bank of America (BofA).
“iPhone cost can increase 25 percent purely on higher labor cost in the US,” BofA analysts led by Wamsi Mohan wrote in a note to clients on Wednesday.
While the tech giant can find domestic labor for assembly, a “significant portion” of parts used in manufacturing the iPhone would still be assembled in China and imported to the US, they added. Assuming Apple has to pay reciprocal tariffs on those imports, its total cost would rise 90 percent or more, they estimated.
Photo: Hector Retamal, AFP
The estimate comes as US President Donald Trump zeros in on China for his trade fight. The Trump administration paused its reciprocal tariffs on dozens of countries for 90 days, but increased its duties on China to 125 percent. Meanwhile, China slapped 84 percent retaliatory levies on American goods.
Fear of price increases spurred iPhone panic buying last weekend, while Apple chartered cargo flights to ferry 600 tonnes of iPhones, or as many as 1.5 million, to the US from India, in an effort to beat Trump’s tariffs, sources told Reuters.
For Apple to make relocating its final assembly of iPhones to the US viable, it would need tariff waivers on components and sub-assemblies manufactured outside of the country, Mohan wrote. However, he doesn’t see this happening.
“Unless it becomes clear as to how permanent the new tariffs are, we do not expect Apple to take the step of moving manufacturing into the US,” Mohan said. “We do expect, however, that Apple will continue to diversify its supply chain, and also increase production of iPhones in other countries such as India.”
As Apple diversifies its manufacturing beyond China, it has positioned India for a critical role. Taiwan’s Foxconn Technology Group (富士康) and India’s Tata Electronics Pvt Ltd, its two main suppliers there, have three factories in all, with two more being built, Reuters reported.
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