[By Guancha Observer Network, Ruan Jiaqi]

Apple Inc. is becoming one of the most severely impacted American technology companies due to the "trade war." For a long time, China has been the main production base for Apple products. In recent years, in order to achieve diversified layouts, Apple has expanded its business to India and Vietnam. However, the so-called "reciprocal tariffs" promoted by U.S. President Trump have precisely targeted Apple's painstakingly built global production layout.

American media outlet The Washington Post reported on September 9 that the iPhone can be regarded as the ultimate symbol of the era of global supply chains. It was designed by engineers and designers in California and assembled in China and India, with components sourced from numerous different suppliers, each having their own complex supply chains behind them. It is this globalization of complex collaboration that has made Apple one of the most valuable companies in the world, as well as a cultural and economic force.

"But Trump is calling for an 'economic revolution' and trying to destroy this system," the media reported. Trump unrealistically fantasizes about these supply chains and component suppliers being set up within the United States, hiring American workers.

"It's almost like betrayal," a person familiar with Apple's plans told American media. Apple was required many years ago to disperse its production bases outside of China, "and they really did it. But now India and Vietnam are also affected by the tariffs."

It remains unclear whether companies with such high profit margins like Apple will bear the additional costs themselves or pass them on to consumers. Some analysts believe that once Apple sells out all its inventory equipment in the U.S., price increases may start within weeks.

"I really don't see any other solution," said Ryan Reith, group vice president of market research firm IDC.

While Apple is urgently transporting iPhones and other products back to the U.S. from India and China at a speed of "three cargo planes in three days," American consumers are also rushing to buy upgraded Apple products before prices rise.

This Monday, 66-year-old retiree Steven Rubio accompanied his husband to an Apple store in downtown San Francisco to purchase an iPhone 16e before the price of electronic products rises.

Rubio told American media that they had no immediate plan to buy a phone, but after hearing about the tariff news, "we thought: we'd better go ahead and buy one now." Coincidentally, their friends were also affected and were busy upgrading iPads and other electronics to newer models.

On September 9, 2024, in California, USA, Apple held its 2024 autumn product launch event. The iPhone 16 series was unveiled. IC Photo

The Washington Post reported that consumers like Rubio are not the only ones eager to protect themselves from the potential impact of the trade war. The entire technology industry is now struggling to cope with the severe tariff impacts threatening their supply chains and business prospects.

Although Apple has tried for many years to reduce the impact of possible U.S. trade policies toward China by expanding manufacturing bases, most iPhones are still manufactured in China. Moreover, regardless of where the devices are assembled, key components such as processors, screens, cameras, storage chips, and modems come from all over the world before being assembled into finished products.

If tariffs persist, according to TechInsights research analysts' estimates, the cost of a 256GB version of the iPhone 16 Pro, including approximately $30 (about RMB 220) for assembly and testing, would be around $580 (RMB 4250), already exceeding half of the device's retail price.

If the 54% tariff imposed on Chinese goods by the U.S. is added, the cost will rise to around $850 (RMB 6229), significantly reducing profit margins. Morgan Stanley predicts that this round of tariff costs could result in losses of up to $33 billion annually for Apple.

Due to the impact of tariffs, Apple's stock price has fallen for four consecutive days, closing down 4.98% on Tuesday, losing its title as the "world's most valuable company," with Microsoft taking its place. Over the four trading days following the announcement of reciprocal tariffs (from last Thursday to Tuesday), its stock price plunged a cumulative 23%, wiping out $773.186 billion in total market value.

American media pointed out that when the tariff news arrived, Apple was at a critical juncture, having to deal with declining consumer enthusiasm while facing intensified competition in some key markets.

Previously, Apple failed to attract mainstream consumers with its expensive Vision Pro headset, and recently received criticism for underwhelming performance of the "Apple Intelligence" feature. Meanwhile, overseas consumers are increasingly choosing Chinese Huawei and South Korean Samsung smartphones, while existing Apple users are happy to continue using their current devices.

Analysts predict that, at this critical moment, if Apple is forced to raise iPhone prices, more consumers are expected to choose to continue using their existing devices after the release of three new models in September.

A person familiar with Apple's plans told American media that as a potential short-term response, Apple will increase iPhone production capacity in India and then ship them to the U.S. However, American media believes that this effort may not alleviate the pressure of price increases. Since phones produced in India alone cannot meet global demand, a large number of iPhones still need to be assembled in China. And once Apple makes pricing decisions, it is likely to implement them uniformly.

Industry observers are divided on whether Apple will pass on the full burden of these additional tariffs to consumers.

In the view of IDC's Reith, Apple seems unlikely to bear the cost of these new tariffs itself. "They have never done so during past difficult times," he said.

Gerrit Schneemann, senior analyst at market research firm Counterpoint Research, believes that because the profit margin on iPhones is very high, Apple has the ability to "digest these new costs better than most other companies." Even if Apple is unwilling to fully bear the costs, moderate price increases may not deter consumers from purchasing new iPhones, especially for those who buy on installment plans, where the impact may be smaller.

The severity of the challenges faced by Apple's supply chain has also led some market observers to doubt the possibility of bringing iPhone production back to the U.S.

Karoline Leavitt, White House press secretary, claimed at a press conference on Tuesday that Trump "absolutely" believes that Apple and others can produce iPhones and other devices in the U.S., "We have the workforce and resources to do this."

To increase credibility, she also mentioned Apple's $500 billion investment plan in the U.S., "If Apple thought they couldn't achieve this goal here, they wouldn't invest such a large amount of money."

U.S. Commerce Secretary Lutnick attempted to defend the tariff policy in an interview with American media. He painted a picture of "millions of human armies tightening tiny screws to manufacture iPhones" happening in the U.S.

However, The Washington Post pointed out that if Apple were to start producing these devices in the U.S., the high labor costs in the U.S. and reliance on parts from Asian suppliers would both significantly increase the price of the iPhone. According to CNBC reports, Laura Martin, an analyst from investment bank Needham, also noted that even if Apple decides to relocate its supply chain back to the U.S., it will be a long process spanning several years.

Most supply chain experts agree that it is impossible to completely produce iPhones in the U.S. As the informed person familiar with Apple's plans mentioned earlier, "iPhone manufacturing will not return to the U.S."

The return of manufacturing to the U.S. is something Americans themselves do not believe in. When Rubio's husband bought a new phone, he also lamented with a helpless tone, "The manufacturing superpower, we can't go back."

This article is an exclusive contribution from the Guancha Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7491158151493075494/

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