US President Donald Trump can breathe, inflate and threaten Tim Cook’s house with an import rate of 25% of the iPhone, but analysts say that even this threat will not be unlikely to bring Apple’s manufacturing.
In response to Trump Declaration last weekMorgan Stanley analysts released a research thesis on Tuesday on Trump’s last threat to him in a way that will appeal to him on Tuesday.
The report, provided to The registerconcluded that the original 145% price Imposed by Trump on certain imports of China last month would have moved Apple on the issue, but since the president lost His international Stardedown and promised to reduce this rate, the economy no longer makes sense to Cupertino.
According to the crunchers of Morgan Stanley Number, an iPhone manufactured in the United States would be at least 35% more expensive than that made abroad when taking into account prices on single source components made in China and higher American labor costs. This means that an iphone of $ 999 would be $ 1,350 – at least – if Apple wanted to keep a similar gross margin.
A) The 25% rate will have no effect; It should be several times higher to compensate for the local production cost
With a price of 25% on iPhone imports from China or India, on the other hand, Apple should increase prices on iPhones by only four to six percent worldwide to maintain profits.
Smartphone canalys and IoT Runar Bjorhovde analyst agreed with Morgan Stanley’s analysis in an email to The register. “(A) The 25% rate will have no effect; it must be much higher to compensate for local production costs,” said Bjorhovde.
In other words, kindly try, Mr. President, but these threats will have to be more serious.
These are not only standing retail rooms
Further comments On LinkedIn, looking at what Apple would need to produce iPhone onshore for the American market, Bjorhovde also agreed that there was much more image than prices.
If Apple decided to engrave Trump’s requests, new American factories would have to be built, form a bunch of new workers to make iPhones and face “the rise in assembly and test costs” in addition to labor costs and above-mentioned components, said Bjorhovde.
Fact all this, says Morgan Stanley, and we examine a minimum of two years before Apple could build, equip, personal and start to assemble iphones in a new Greenfield factory based in the United States. Apple would need more than one factory to meet the United States of iPhone demand, predicted Morgan Stanley, and should find more than 100,000 people “qualified in very specific tools” to meet the peak demand.
“These two facts have important challenges in time to market,” said Morgan Stanley.
More realistic, said the investment bank, it would take four years or more to advance production if we consider the case of TSMC New Fab in Puce in Arizona. This installation began construction in 2020 and was only put online at the end of last year, noted Morgan Stanley.
If an Apple commitment followed the same calendar, the first iPhone built by the United States may not reach consumers before leaving President Trump
“If an Apple engagement followed the same calendar, the first iPhone built by the United States may not reach consumers before President Trump has left his duties,” concluded bankers – a perfect timing for the next Occupant of the White House to have the credit.
Bjorhovde is even less optimistic.
“I think we will examine a minimum investment of three to five years to obtain a production capacity in the United States,” said the channel analyst, and even this calendar is delivered with a number of warnings. In particular, Apple should find a way to import experts from the manufacturing of iPhone from China to the United States “supported by an investment by, for example, Foxconn,” said Bjorhovde.
Let’s not forget that Trump cannot just wave his hands and use targeted prices either. Morgan Stanley stressed that smartphones are currently exempt from Trump’s various Trump prices decrees, offering the United States two options to promulgate Trump’s weekend decree. An option is through international emergency powers ActThis gives the president the power to take prices if a national emergency is declared. The second comes from a study of article 232, which aims to establish national security risks to manufacture things outside the United States.
“The two options are faced with legal opposite winds,” said Morgan Stanley. “An investigation of article 232 could have a firmer position given that the administration is Already assess the prices of semiconductors via this road. “”
Will the cook still collapse at political pressure?
Steve Jobs he saidWe have he saidAnd we will distribute it: iPhones will never be a product made in the USA. However, this does not mean that Apple will not try to do something else to appease Trump.
If Apple ignores the 25% price of Trump and refuses its support request to provide iPhone manufacturing in the United States, “Tim Cook status with the current administration (Will) is deteriorating,” predicted Morgan Stanley. Apple can also face new pricing threats, predicted the bank, which could still be worried afraid Investors.
Apple has already been committed to Invest $ 500 billion In the United States, more than four years, covering areas like AI, flea and workforce training, but not iPhone manufacturing, noting that it is still ready to play ball with Washington. Morgan Stanley predicted that it could do more that does not mean to spoil with the margins on his large product.
Morgan Stanley believes that it would be logical that Tim Cook announces to relocate certain “smaller products”, suggesting that Macs, HomePods, Airhairs and other products could be made in the United States with much less investment.
It is “not as symbolic as the iPhone,” said Morgan Stanley, but it would be a victory for Trump and Apple. The first “obtains the largest electronics in the world to engage, publicly, to a new American production”, noted the bank, while Apple reduces “geopolitical threats at home”.
Apple did not answer questions from this story. ®
