Apple Inc on Thursday reported first-quarter profit above expectations, but warned that US tariffs could cost the company and were disrupting its supply chain.
Apple expects US tariffs to cost US$900 million in the current quarter, even though their impact was “limited” at the start of this year, Apple chief executive Tim Cook said on an earnings call.
“We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter,” Cook said. “Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs.”
Photo: Reuters
Apple plans to source more than 19 billion chips from the US this year, part of a global supply chain shift to gradually lessen its reliance on China and elevate India for iPhone production.
Cook said he expected “a majority of iPhones sold in the US will have India as their country of origin,” adding that Apple’s products were exempt from Trump’s most severe tariffs for now.
India was mentioned almost as many times as China on Thursday’s post-earnings conference call, reflecting its rising importance.
Apple has accelerated its manufacturing expansion in India, which is rising as a market — at a time when Apple’s China sales keep declining — and is likely to be a more politically favored US trade partner over the long run.
Apple already makes 20 percent, or one in five, of its iPhones in the South Asian country. It expects to import most of the iPhones for the US from India by the end of next year.
Tit-for-tat exchanges have seen hefty US levies imposed on China, with Beijing setting retaliatory barriers on US imports.
High-end tech goods such as smartphones, semiconductors and computers received a temporary reprieve from US tariffs.
“We have a complex supply chain, there’s always risk in the supply chain,” Cook told analysts on the call.
“What we learned some time ago was that having everything in one location had too much risk with it and so we have, over time, with certain parts of the supply chain, not the whole thing, but certain parts of it, opened up new sources of supply,” he said.
Beyond India, Trump wants Apple to begin building its devices in the US, but that is unlikely to happen at scale in the foreseeable future. For now, Cook pledged to ramp up local procurement of chips and other components.
The iPhone maker would obtain tens of millions of advanced processors from a new facility in Arizona operated by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) this year, Cook said.
The facility has started making processors for low-end iPads and Apple Watches, Bloomberg News reported.
Apple and TSMC have announced US investments amounting to hundreds of billions of dollars in line with the White House’s push to bring advanced manufacturing to the country.
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