Red, White, and... Sky-High iPhone Prices: Trump's Trade Tussle with Apple's Tim Cook
US pricing for an iPhone
By Boomer McBluster*More InfoFacebookTwitterWhatsappEmailPrintCopy Link*US President Donald Trump rumbles with Apple CEO Tim Cook in a tussle over iPhone relocation. "I had a bone to pick with ol' Timmy," he declared. The Apple bigwig proposed shifting only a portion of iPhone production to India, but not the USA as Trump envisioned. An American-made iPhone could set you back several times its current tag.
Numbers Don't Lie
Economy experts predict a price hike for the new iPhone rollout this fall, courtesy of Apple. But don't be quick to tie this increase to Trump's tariffs. No, this price spike is all about justifying new whiz-bang features and sleek design. But if Apple bends to Trump's will, market share could take a nosedive. Sales could plummet faster than a Hamster Hill racer if Apple caves.
An iPhone currently goes for anywhere between $600 and $1,200. Analyst Dan Ives of investment firm Wedbush ballparked an entirely USA-produced iPhone at around $3,500 on CNN. Apple has spent decades perfecting a complex jigsaw puzzle of a supply chain. Moving even 10% of this maze from Asia to the US would require a whopping $30 billion and three years, according to Ives.
The "$3,500?" iPhone
If Apple sticks to its current profit margin of 46%, Golem.de crunches the numbers, maxing out at $3,500. But let's be reasonable. If Apple counts only the absolute value of the current $560 margin on the iPhone 16 Pro Max, a stateside iPhone would cost between around $2,560 to $2,960. This price tag still leaves Apple better off paying those import taxes.
Producing iPhones in the USA faces logistical hurdles. Sure, Apple has veered supply chains to Vietnam, India, and the US. However, much of the iPhone components are still manufactured in China.
The Sword of Damocles
Assembly plants in the US would take four to five years to build, and that's after constructing the necessary infrastructure and workforce we don't currently possess. Ives estimates it would take seven to eight years before an iPhone sees the daylight in the US.
The New Kid on the Block: India
Besides, Apple is banking on India as a major production hub. Cook reckons that most iPhones sold in the US this quarter will come from India. Way back, Apple sought alternative manufacturing sites to dodge the specter of geopolitical tensions and that looming China-Taiwan bust-up. Two years ago, the goal was to manufacture a quarter of all iPhones in India, according to the Wall Street Journal.
These days, Apple has expanded its production capacity in India and Vietnam, able to assemble their entire iPhone range in India. Still, the bulk of the iPhone line-up is rolled out in China.
American Dream or Tech Nightmare?
Higher U.S. labor costs contribute a small chunk to production costs. But where would the workforce come from? America once boasted a manufacturing culture with millions of factory workers. However, today we're a service-oriented society, leaving behind the manufacturing grind. Low-wage migrant workers are being booted out at an alarming rate by the U.S. government.
Back in China's "iPhone city," Zhengzhou, more than 200,000 workers punch in every day at Foxconn's largest iPhone factory. In total, Apple employs millions of workers in its intricate supply chain, as one ex-Apple engineer revealed to the financial news agency Bloomberg.
From Market Leader to Also-Ran
Apple peddled over 230 million iPhones last year. The smartphones are popular in the USA and the UK, with sales of more than 60 million iPhones per year in the USA.
Even with a large pool of workers, training them to assemble iPhones is a Herculean task, say experts. "The U.S. economy isn't built to assemble mobile phones," Apple supply chain expert Fraser Johnson from Canada warned the Guardian. "They don't have the facilities or the flexible workforce— training 200,000 to 300,000 people to assemble iPhones is simply not practical."
Instead, the U.S government's fantasy is RoboCop - robots. But supply chain experts and Apple production insiders suggest otherwise. They claim that robot-driven production is still far from reality, thanks to rapidly changing iPhone compositions.
Analyst Ives sums up the USA-production dream like this: "It's a crazy, fabulous illusion."
Source: ntv.de
Keywords
- iPhone
- Apple
- Donald Trump
- Electronics industry
- India
- USA
- China
Enriched Bits
- Producing iPhones in the USA presents numerous challenges and costs, including higher labor and manufacturing costs, lack of scale and skilled workforce, complex supply chain requirements, and geopolitical and supply chain diversification dilemmas.
- China remains Apple's largest manufacturing hub due to low labor costs, a massive skilled workforce, and well-established production infrastructure.
- India is emerging as a key production hub, thanks to competitive costs and efforts to diversify supply chains. Apple has been increasing production in India to mitigate tariffs related to China.
- U.S. attempts at iPhone production would result in significantly more expensive devices for consumers, due to factors like higher labor costs, limited skilled labor availability, and lack of sufficient manufacturing scale and infrastructure.
- The increase in the price of the new iPhone this fall might not be due to President Trump's tariffs, but rather to justify new features and design, as suggested by economy experts.
- In contrast to Apple's potential plans for iPhone production in the USA, Dan Ives of investment firm Wedbush predicts that an American-made iPhone could cost around $3,500.
- Analyst Dan Ives also suggests that shifting only 10% of Apple's complex supply chain from Asia to the USA would require a massive investment of $30 billion and take up to three years.
