Where Can Apple Make Its iPhones If Not In China?

Apple primarily assembles its iPhones in China, but the tech giant could change that if Trump’s tariffs hit 25 percent. For now, Apple is planning to sit tight on its current manufacturing model.

People familiar with the matter said that Apple and its suppliers are currently assessing the trade war between the U.S. and China. Apple will still keep manufacturing its iPhones in China if the tariffs only hit 10 percent. However, if tariffs rise to 25 percent, Apple may move out of China entirely and start producing iPhones somewhere else, according to Bloomberg.

Right now, Apple isn’t directly affected by the trade war between the U.S. and China. However, President Donald Trump could still decide to raise import tariffs on smartphones as part of the administration’s series of levies that it’s been implementing this year. Last month, Trump suggested that a 10 percent tax on smartphone imports wouldn’t hurt Apple or its customers if the U.S. doesn’t reach a deal with China.

“Maybe. Maybe. Depends on what the rate is,” President Trump was quoted as saying by the Wall Street Journal. “I mean, I can make it 10%, and people could stand that very easily.”

If that happens, business would go on as usual for Apple and it will keep manufacturing its iOS 12-running smartphones in China. But if tariffs rise to 25 percent, the tech giant might be forced to completely move its production outside the country. This is seen by many as a huge challenge even for Apple.

A majority of Apple’s iPhone production is being handled by its partner Hon Hai Precision Industry Co. in China before units are shipped all around the globe. This isn’t just for iPhones either as Apple’s partner is also responsible for the production of iPads and Mac computers. However, some iPhone assembly is already being done outside of the country.

Apple has also partnered with Taiwanese manufacturer Wistron, which built an assembly facility in India. This facility was originally intended to handle iPhone SE production back when the low-cost model was gaining ground. Foxconn, which handles final assembly for Apple devices, also opened a facility in Brazil in 2011. However, devices from that country are far more expensive than in the U.S., according to TechCrunch. Apple could also start manufacturing the iPhone in the U.S., but this could also result in a significant price increase.

It’s certainly possible for Apple to shift its manufacturing outside China, but it may not be a good business model for the tech giant. Apple CEO Tim Cook did say in July that the tariffs could have “unintended consequences" that may directly affect consumers and the economy.