IPhone sales may fall sharply as the US raises 25% tax on $ 200 billion of Chinese goods, Apple Watch and AirPods escaping from production in Vietnam - Photo 1.
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IPhone sales may fall sharply as the US raises 25% tax on $ 200 billion of goods China, Apple Watch and AirPods escape from production in Vietnam


The four companies that offer leading smartphones in the US are Apple, Samsung, LG and Lenovo, respectively, with a total market share of 90%. While Samsung and LG have enough production capacity outside of China to provide smartphones to the US market, Apple and Lenovo depend almost entirely on Chinese partners.

Apple's iPhone accounts for 40% of the smartphone market in the US market and is mainly manufactured in China. Only a small amount of older generation iPhones are manufactured at the Wistron factory in India. This factory started production in the first half of 2019.

Apple and its partners have plans to move production lines from China to India. The Indian Wistron capacity expansion project is expected to be completed in the third quarter of 2019 and Foxconn's newly built plant for iPhone production will begin trial and small-scale production in the third quarter. 2019. Another partner, Pegatron, is also looking for a place to build a factory in India but will not be able to produce iPhone here in 2019.

In response to the need to launch a new iPhone in September 2019 as well as old smartphones in the US market before the end of the year, starting from July – August, Apple partners will have to produce about 6 up to 7 million iPhones every month in India. However, according to estimates, the iPhone production capacity of Wistron and Foxconn in India could not reach this figure before the end of 2019.

Therefore, at the end of 2019 when the 25% tax increase that the Trump administration imposed on 200 billion USD of goods produced in China, including the iPhone, came into effect, iPhone sales will be seriously affected. When Apple raised iPhone prices to offset tax increases, their US market share would fall to Samsung and LG.

Initially, both Apple Watch and AirPods of Apple were listed on the $ 200 billion list of Chinese goods subject to a 10% increase in US taxes from September 2018. However, they were then removed from the list the night before the tax took effect.

IPhone sales may fall sharply as the US raises 25% tax on $ 200 billion of Chinese goods, Apple Watch and AirPods escaping from production in Vietnam - Photo 2.

Quanta Computer and Compal Electronics are currently two Apple Watch manufacturing partners. However, Quanta gradually stopped producing Apple Watch from Q2 / 2019, leaving its contract with two other Chinese firms, Inventec and Luxshare. Compal and Luxshare factories located in Vietnam and Inventec's factory in Malaysia can be used to produce Apple Watch instead of Chinese factories.

Apple's AirPods are currently produced by Inventec, Luxshare and Goertek. As a precaution, Apple could switch to producing AirPods completely at the Luxshare and Goertek factories in Vietnam.

In fact, Apple has begun moving its Apple Watch and AirPods production lines outside China from the second half of 2018. Therefore, the impact of the new tariff barrier on these two product lines will be smaller. compared to iPhone.


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