Reports are emerging that in response to the current US-China trade war, Apple supplier Foxconn is prepared to move production of all iPhones meant for the US market, out of China.
The news comes as a new tariff of up to 25% on phones, laptops, and tablets imported to the US from China is scheduled to come into effect by the end of June.
Apple has already suffered a major dip in iPhone sales in recent years, this new tariff could lead to the extra cost passing on to the US consumer, further pushing them to Apple’s competitors notably Samsung.
Otherwise, the tech giant could absorb the cost, which would mean its earnings per share would take a hit of six to seven per cent.
As Apple provides close to half of Foxconn’s revenue, a decreased demand for iPhones leads to a drop in manufacturing demand for the company.
Foxconn recently saw its profits fall by 12.6% and let 50,000 staff go in response to declining iPhone sales.
The head of semiconductor business, Young Lui was reported saying that as close to 25% of the company’s production capacity is outside of China, it has the capacity to meet Apple’s “need in the US market.“
Currently, the manufacturer has plants in the US, Brazil, Mexico, Indonesia, Vietnam and Australia among others.
However, Liu confirmed that Apple is yet to instruct Foxconn to move manufacture outside of China.
Foxconn has already begun preparations to shift iPhone production to India in an effort to avoid the country’s 20% import duties.
