Despite ongoing trade tensions between the U.S. and China, experts suggest that Apple is unlikely to move its iPhone production to the United States.
Even with U.S. tariffs at 145% on Chinese-made goods, a shift in iPhone manufacturing away from China, where Apple has produced the majority of its iPhones for the past 18 years, faces significant hurdles.
The primary obstacles include a well-established supply chain in China, developed since the 1990s. Building new facilities in the U.S. would require substantial investment and years of development, potentially tripling iPhone prices and negatively impacting sales.
Wedbush Securities analyst Dan Ives stated, "The concept of making iPhones in the U.S. is a non-starter," a sentiment echoed by many in the investment community. Ives estimates that moving production to the U.S. could raise the price of an iPhone from $1,000 to over $3,000, with a possible earliest completion date of 2028. "Price points would move so dramatically, it’s hard to comprehend."
Apple has not yet commented on the tariffs, but the issue is expected to be discussed during an upcoming quarterly conference call on May 1, where CEO Tim Cook will address analysts regarding the company's financial performance and future strategies.
The China tariffs are a pressing concern, as Apple's stock value has decreased by almost 20%, reducing its market capitalization by $600 billion since the tariff increases began on April 2.
If the tariffs persist, analysts anticipate that Apple will eventually need to increase prices on its products. Silicon Valley's supply chain is heavily reliant on China, India, and other overseas markets affected by the ongoing trade war.
A key question remains: how long can Apple maintain its current prices before the tariffs significantly impact profit margins and force price increases for consumers?
Forrester Research analyst Dipanjan Chatterjee suggests that Apple's ability to maintain current prices stems from its substantial profits generated by subscriptions and services, which accounted for $96 billion in revenue last fiscal year and remain unaffected by the tariffs.
Chatterjee noted, "Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term."
Earlier this year, Apple announced plans to invest $500 billion and create 20,000 jobs in the U.S. by 2028, but this commitment does not include domestic iPhone production. Instead, Apple will fund a data center in Houston to support artificial intelligence technologies.
White House Press Secretary Karoline Levitt pointed to Apple's investment as evidence of the feasibility of U.S. iPhone production. "If Apple didn't think the United States could do it, they probably wouldn't have put up that big chunk of change," Levitt stated.
Commerce Secretary Howard Lutnick also predicted that tariffs would lead to a manufacturing shift during a recent CBS interview. "The army of millions and millions of human beings screwing in little screws to make iPhones, that kind of thing is going to come to America," Lutnick said.
However, during a 2017 conference in China, Tim Cook expressed reservations about the availability of skilled labor in the U.S. to handle the intricate work involved.
Cook stated, "In the U.S. you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields."
The previous administration also pressured Apple to move iPhone production to the U.S. but ultimately exempted the iPhone from tariffs. This period saw Apple commit to investing $350 billion in the U.S., and prompted the company to begin producing some iPhones in India and other products in Vietnam.
In 2019, Cook guided the then-president through a Texas facility where Apple has assembled Mac computers since 2013. The president later claimed credit for the plant, despite it opening during the prior administration. He posted, “Today I opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America,"