Apple Inc. is considering two options regarding manufacturing its product in China. One, they might move out of the country if the U.S imposes 25% tariffs. Two, stay if the tariffs remains 10%, according to this Bloomberg report.
Amidst the trade war between U.S. and China, President Donald Trump last month signalled that tariffs could be imposed on smartphones and laptops made in the world’s largest manufacturer of electronics.
The company has long located its production centre in China for majority of its flagship products – iPhone, iPads, Macbooks. The company’s supply chain now extends to hundreds of companies including Hon Hai and Pegatron Corp. Meanwhile, iPhones – majorly assembled by Hon Hai Precision Industry Co. in China have been freed in the recent China/America trade war.
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According to RBC analyst, Amit Daryanani in a Nov. 28 research note, a 10-percent tariff could result in an earnings-per-share decline of just $1 for Apple, should all its hardware sold in the U.S. be subject to the levy and the company absorbs the cost. While, more harsh consequence of a 25 percent tariff — absorbed by Apple — could result in an EPS decline of almost $2.50, he said.
It is uncertain if all Apple production would move to another country or just production for the U.S. because of the country’s lion share in Apple’s product market.
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