A quarter of the company’s factories are outside of China.
Foxconn has announced that it is ready to move the production of all iPhones for the United States outside of China. This will allow Apple to avoid the effects of a trade war between countries. This was reported by Bloomberg and The Wall Street Journal, citing Foxconn head of semiconductors Yun Liu (Young Liu).
25% of our production capacity is outside of China and we can help Apple meet its needs in the US market. We have enough factories to do this.
Yun LiuFoxconn Semiconductor Head
Liu spoke about the possibility of transferring production of iPhones for the United States during a press conference for Foxconn investors. He also noted that Apple has not yet made such requests.
As noted at The Verge, Apple may reconsider the production of iPhones when the 25% tariff increase comes into effect. Experts expect the restrictions to apply to phones, laptops and tablets imported from China to the United States.
Analysts polled by Bloomberg explained that Apple faces a choice: either to increase the cost of devices for customers, or to pay for the difference on their own. According to experts, prices may increase by 9-16%, but in this case, the demand in the US market will fall by 10-40%, and in case of covering the difference Apple shares may fall by 6-7%.
According to journalists, Foxconn is heavily dependent on Apple. The American company is its largest customer and brings about half of the revenue, so reducing demand for iPhones will lead to a drop in profits for Foxconn.
The trade war between the United States and China escalated in 2018. Donald Trump did not like that the People’s Republic of China received much more from trade with America than the States, so countries began to impose duties on each other’s goods.