Trump Wants Apple To Manufacture In The US -- How Much Would iPhones Cost If They Did?

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Posted: Sep 11, 2018 9:51 AM
Trump Wants Apple To Manufacture In The US -- How Much Would iPhones Cost If They Did?

Trump tweeted Apple should manufacture its products in the U.S. to avoid his proposed tariffs. But what about price?

Consider Tump's absurd view of the world.

Bank of America View

A Bank of America analysts says you will have to and other goods to satisfy Trump's ridiculous view of "winning".

IPhone prices will rise significantly if Apple assembles the smartphone domestically, according to Bank of America Merrill Lynch.

"'Back to US' manufacturing seems to be back on the agenda for President Trump … We believe Apple could ask Hon Hai and Pegatron to shift a small portion of their iPhone manufacturing to the US in response to President Trump's request," analyst Wamsi Mohan said in a note to clients entitled "Handicapping the China trade risk and potential for ramping US manufacturing" Monday. "The conclusion was for the iPhone (not currently impacted by Tariffs) moving production (100% of final assembly) to the U.S. would need 20% price increases to offset the incremental labor costs."

Mohan said under the "most likely" scenario in which Apple moves 10 percent of its iPhone assembly to the U.S., the average selling price of the iPhone would rise by 8 percent. He also said if Apple shifts 50 percent or 100 percent of iPhone assembly domestically, it would increase iPhone prices by 14 percent and 20 percent respectively.

Price Double?

The Financial Review says Donald Trump's 'Made in the USA' iPhone would cost $US 2000.

Would you willingly spend $US 2000 to buy an iPhone that today costs a grand?

That's how much veteran analyst Tim Bajarin tells me it would cost Apple to retail if it made iPhones in the United States.

Think about the parts dilemma for a second. Remember that Apple makes more than 200 million iPhones yearly and has to come up with OLED screens, camera sensors, solid state storage drives and the like to put into every one of them.

These are all made-in-Asia products.The reason the launch of the iPhone X was delayed in 2017 to November from September was the scarcity of the OLED screens. Apple couldn't get enough of them for the phone, and it took time to get factories up to speed.

Apple's not alone. Cameras have been made in Asia for decades, Samsung creates its Galaxy phones in South Korea, Vietnam and India, Amazon gets Echo speakers made in China and Google gets the Pixel phone made in South Korea.

I think the American consumer would have a tough time forking over $US 2000 for an iPhone, but what are they going to go -- all suddenly switch to using Samsung phones? Granted, Samsung sells more phones yearly, mostly lower-priced models in developing countries, but the iPhone is the best-selling consumer device, hands down.

Not Just Apple

Apple would be one of the companies hardest hit, but the same setup applies across the board.

Forcing people to pay 10 to 20 percent more for goods, or 100% as one analyst suggested, to create a few jobs when unemployment is under four percent is not terribly smart, to say the least.