As tense US-China trade negotiations continue, the technology industry remains concerned about the impact of any tariffs on product prices.
The iPhone 11 - due for release soon - is one of many products whose initial sales could be hit by any increase in the retail price because of those tariffs, but Apple may have the solution to keep the price low.
According to Apple Insider, which saw an investor note written by investment bank JPMorgan, analysts believe that Apple has managed to reduce the bill for materials manufactured in the iPhone 11 by thirty to fifty dollars per unit.
The material bill for the device is the total cost to the manufacturer for all components that make up a product, so if an iPhone 11 costs Apple less to manufacture than an iPhone XS, any tariff applied to it will also have less impact.
The new analysis believes that this small reduction in the cost of production will reduce the impact by a third. Although this will not be enough to eliminate the total cost of tariffs on Apple devices, it represents an improvement.
As currently scheduled, Apple's products will be subject to a 10 percent commercial duty from December 15, which was delayed from September 1. The tariff imposes a 10 percent increase in prices for various products purchased to the United States, including electronics such as computers and gaming platforms, imported from China.
Although 10% is a big increase, analysts such as well-known analyst Ming-Chi Kuo believe that Apple, as well as other companies, will not increase the retail price of its products to offset that tariff increase.
Instead, the affected manufacturers will try to bear the costs themselves as they move manufacturing out of China to avoid US tariffs, analysts say.
This avoids the risk of transferring that cost increase to retailers and consumers, meaning that the user may not notice tariffs if they want to upgrade to a new phone.
Apple's president, Tim Cook, has also appealed to the US government for tariff exemptions, based on risks from rival Samsung, which will be able to make significant gains. .
Apple future could be in INDIA !!!
Apple could turn to India to make the next iPhone, in part because of looming threats and the effects of the US-China trade war.
From the beginning of 2019, iPhone phones are assembled at a Foxconn factory in the town of Sriobirumbudur in Kanchipuram district of Tamil Nadu, according to a report by The Hindu website.
While Foxconn (the Taiwanese contracted company for Apple's iPhone maker) already makes phones in India
Foxconn spends $ 365 million to expand the plant and may create up to 25,000 new jobs in India, the country's industry minister told Reuters.
According to another source, the expansion will allow Apple to manufacture in India the most expensive models of its phones, such as the iPhone X series phones.
As the world's largest electronics contracting company, Foxconn has factories around the world, including the United States. However, the current trade war between the United States and China has played a major role in the company's future strategy; Foxconn is currently looking to open a new production base in Vietnam in preparation for the effects of the trade war.
Apple has already assembled some low-cost iPhones in India, such as the iPhone SE and iPhone 6S, but this was done by another manufacturer. This latest development with Foxconn could be a step by Apple to expand its share in the mobile market in India, which is the fastest growing smartphone market in the world.
