Apple partner considers moving production out of China due to tariffs

Apple partner considers moving production out of China due to tariffs
President Donald Trump has threatened to expand the tariffs currently imposed on Chinese exports to the U.S. The next group of products in line to get socked by a 25% import tax includes smartphones and other tech devices assembled in China and shipped to the U.S. (which includes the Apple iPhone). One analyst says that the tariff if imposed on smartphones, could raise the retail price of the iPhone XR by $160. While contract manufacturers in China are looking at moving production to other countries, the executive of one such firm says that it will need support from the supply chain to do so.

Digitimes today passed along comments made by Quanta Computer chairman Barry Lam. The company assembles the Apple Watch and is expected to be involved in Apple's rumored AR glasses. The executive says that without help from the supply chain, contract manufacturers that move assembly to other countries to avoid tariffs are just as likely to face higher costs to obtain parts and components. Lam says that the company is considering moving production to Southeast Asia, but notes that for some devices that it assembles in large volume, the costs of paying for customs and the shipping of components to another country might be more than the tariffs.

Quanta vice chairman CC Leung says that the company has purchased new plants in Taiwan as part of contingency plans it drew up in the second half of last year. The company correctly figured that the rising tensions between the U.S. and China would lead to the imposition of tariffs by both countries. Despite this, Quanta is not prepared for the next group of items that could end up being taxed 25% and is scrambling to come up with a response. Leung says that any shift in production out of China must include the relocation of the entire supply chain. While Quanta has been looking at facilities in other Southeast Asian countries, the executive says that its supply chain partners are not yet in sync with the company.

While devices like the Apple Watch have evaded the tax so far, Apple has been eating the additional costs of importing cases for the iPhone and iPad into the U.S. While this has kept the prices of these accessories from rising in the states, the tariffs are eating into the company's profit margins on these products.

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5 Comments

1. apple-rulz

Posts: 1868; Member since: Dec 27, 2016

Ugh this tariff stuff is going to get ugly for us consumers :(

2. oldskool50

Posts: 447; Member since: Mar 29, 2019

Ha! This guy said exactly what I said. That trying to move shipping to another country, could end up costing more. Especially because much of what they are ordering is already made in China. So shipping it to a place like Korea would be dumb. The only company that could move 100% of the production out of China, would be Samsung, since they make most of their phone parts in Korea, with exception of the ones used in China or the US. Moving won't solve the issue, because then the US will just raise the tariff's of stuff coming from another country. Just wait and don't move. You will only have top deal with it 2 years. Once Trump is out of office, a true democrat Congress and House will change these anyways and everything will be back to normal. The iPhone especially being monstrously expensive, will now make it even more expensive which will hurt Apple profit margin. Even though the taxes are even $160. Apple will just add that to the cost to ensure they don't lose to much and so will others. trump is stupid. He doesn't care about losing his own money, so he doesn't care about losing taxpayers money either. But Donald, your daddy can't bank roll you if you bankrupt the US Treasury; like he did for all you failed businesses

5. rossy

Posts: 16; Member since: Aug 23, 2013

I don't want your "normal". Forced technology transfers, foreign company ownership limits, IP theft, currency manipulation all by China is not normal in my book. Oh, your Democrat buddies will spend us into oblivion. Good luck with that.

3. LawnBoy

Posts: 92; Member since: Feb 23, 2019

Good. Chi-comms are bad

4. Habib111

Posts: 24; Member since: Feb 12, 2019

Huh! Too late now, won't do much good if they considered it 5 years back then this would not happen but they think about their pockets not the people if the iPhone were all made in USA, how much economy would grown? But who cares about the people RIGHT!

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