US tariffs on China could cost Apple a whopping $900M
What's the story
Apple CEO Tim Cook has revealed that the company's costs could go up by $900 million this quarter due to US tariffs on China.
He made the announcement during a recent earnings call where he also disclosed plans to shift iPhone production for US from China to India.
He said, "Assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter.... we estimate the impact to add $900 million to our costs."
Production shift
Majority of US-bound iPhones to be made in India
Cook also revealed that a large chunk of iPhone production has already been shifted to India in the last few years.
He predicted that "the majority of iPhones sold in the US will have India as their country of origin."
The move comes as part of Apple's strategy to diversify its global supply chain beyond China, which currently constitutes about 90% of Apple's iPhone production.
Market reaction
Stocks dip following tariff announcement
Following the earnings call and Cook's announcement about the potential cost increase due to tariffs, Apple's stock price fell nearly 4% in after-hours trading.
The dip reflects investor concerns over the unpredictable future of tariffs and supply chain instability.
Despite these challenges, Apple reported a 5% increase in revenue for the January-March quarter compared to last year, and a 2% rise in iPhone revenue.
Production strategy
Production in China to be maintained for non-US markets
Cook confirmed that most Apple products for markets outside the US will continue to be manufactured in China.
However, he also disclosed that Vietnam will become the main production hub for iPads, Macs, Apple Watches, and AirPods sold in the US.
The strategic move comes as part of Apple's effort to optimize its supply chain and inventory amidst tariff challenges.