Apple’s been making iPhones in China for years, but it might be forced to find a new home for its products if tensions between China and the US escalate. This would be a huge change for the brand since nearly its entire manufacturing base is centered in Shenzhen.
Suppliers told Bloomberg (via 9to5Mac) that they can keep production in China going even if tariffs hit 10%. This might change if the US imposes a 25% tariff. Apple would have to seriously consider shifting operations outside the country since importing iPhones into the US will become very expensive.
More Expensive iPhones?
In such a scenario, Apple could either absorb the extra cost or pass it on to consumers. People will not welcome the latter, but that’s what the brand has been doing in countries like India when custom duties and import taxes got raised. The former option will generate less profit, bad news for the firm and its investors.
Moving its production base out of China would thus help Apple resolve this dilemma. This is easier said than done though. Apple relies on a massive network of Chinese suppliers who make every component for the iPhone, iPad, and MacBook and then delivers them to partners like Foxconn for assembly.
Also Read: iPhones get banned in China for violating Qualcomm patents
Shifting all these moving parts sounds like an impossible task. Plus, there’s the question of where they would relocate. The US is the most obvious answer, but it doesn’t quite have the same convenience of being a technology hub like Shenzhen.
India is another choice, but again Wistron just assembles iPhones there and Apple has had clashes with the Indian government as well. The company isn’t pressing the panic button yet since nothing is official, even as partners are supposedly suggesting alternate locations.