Rumor mill: A trade war between the United States and China is causing Apple to seriously consider moving production lines to places outside of China. Foxconn and Pegatron are on standby until US legislators and the president can figure out the tariff situation.
Rumors are flying about that Apple may seriously be considering relocating its iPhone production to somewhere outside of China. Rising tariffs on US imports are a main factor behind potential relocation.
According to sources that spoke with Bloomberg, Apple will remain in China as long as tariffs remain below 25 percent. Cupertino is already braced for a 10 percent tariff on iPhones and does not have any plans of moving for only a moderate increase.
Even though Foxconn, otherwise known as Hon Hai Precision Industry Co., produces the majority of iPhones in China, there are other facilities throughout Thailand, Malaysia, the Czech Republic, South Korea, Singapore, and in the Philippines. A move could be costly, but could happen relatively quickly if need be. Similar to any other business, Apple would likely pass on the cost of tariffs straight to the consumer.
Tim Cook has been slowly changing his statements over time on whether the US is a suitable location for manufacturing the iPhone. Shortly after assuming the role of CEO, Cook deemed China to be the ideal place due to the availability of semi-skilled laborers willing to work for low wages. In an interview earlier this year, Cook stated "it's not true that the iPhone is not made in the United States," pointing out that several components are actually produced in the US and then shipped to China for final assembly.
What Apple's plans are for future production hinges on how Congress and President Trump proceed in negotiations with China. Trump was quoted by the Wall Street Journal last month as being in favor of placing tariffs on smartphones and laptops built in China. Although Apple still shows no signs of moving its manufacturing operations to the United States, Trump has strongly suggested that Apple do so if it wishes to avoid additional tariffs.