Amid mounting pressure on Apple to move its iPhone production back to the US, veteran analyst Ming-Chi Kuo has weighed in, stating that it would be significantly cheaper for the tech giant to absorb a 25% import tax than to relocate its entire assembly chain from Asia.
Speaking on the X platform, Kuo asserted, “In terms of profits, it is obviously more advantageous for Apple to bear the 25% tariff for iPhones sold in the US rather than rebuilding the entire assembly chain domestically.” This statement comes on the heels of former President Donald Trump’s declaration to impose high tariffs on all iPhones not assembled in the US.
The challenge lies in the fact that Apple’s current production chain is not just massive but also intricately and efficiently designed. Much of iPhone assembly takes place in China and India, where partners like Foxconn and Pegatron operate gigantic factories, fine-tuning their processes over decades specifically for Apple. Replicating this system in the US is nearly impossible when considering the costs, time, and the lack of a ready workforce infrastructure.
It is infeasible to move the entire iPhone supply chain to the US. Image: Forbes
While the US is a significant iPhone market, its role in the production chain is modest. Some components, such as Corning’s strengthened glass, originate from the US, but the final assembly—a crucial stage—takes place overseas. To bring this stage back to the US, Apple would have to invest tens of billions of dollars in building factories, training workers, and developing infrastructure, all to replicate a system that is already well-established in Asia.
Apple’s push to expand production in India is not coincidental. This strategic move is rumored to be aimed at diversifying its supply chain, reducing reliance on China, and mitigating policy risks. According to Bloomberg, by 2026, over 60 million iPhones per year will be manufactured at Indian factories, with Foxconn already investing $1.5 billion in infrastructure expansion in the country.
In addition to China, Apple has expanded its supply chain to neighboring countries. Image: Mechead
Financial experts predict that if the 25% tax were implemented, iPhone prices in the US could soar, hurting consumers. Wedbush Securities estimates that if the entire chain were moved to the US, the price of an iPhone could reach $3,500, more than triple the current price.
With over 120 million iPhone users in the US and annual consumption surpassing 60 million devices, Apple has clearly done its calculations. While tariffs present a burden, compared to dismantling the well-oiled Asian supply chain that has been running smoothly for decades, it is the less financially painful option.
References: WSJ, The New York Times
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