Apple is expected to release its highly anticipated iPhone 11 in the coming months, and Apple blogosphere is already brimming with leaks, renders, and speculations about the iPhone 2020
The demand for a new iPhone is expected to be high, but the trade-war between the USA and China could turn things bad for Apple. If things become worse, Apple would have to increase the price of the iPhone 11.
Blue Silk Consultancy, a global supply chain consultancy, has released a report that estimates price increase if tariffs are applied on Foxxcon. According to the report, consumers will have to pay $375 more for an already expensive smartphone.
Double Trouble for Apple
Apple has earned a lot of revenue on the past iteration of iPhones due to its robust supply chain. The availability of cheap labor has also helped for which Apple has been criticized for quite a long time.
After the news broke out, Foxconn claimed that they could move the entire iPhone production line out of China. However, this could help in avoiding tariffs, but it would increase the production cost by 30 percent. On a side note, the next production line is rumored to be India.
If Apple decides to move out of China then they have to increase the price of iPhone 11 which could deter the consumers from buying it. Considering the fact there are better and cheaper alternatives in the market.
On the other hand, if Apple moves out and does not increase the price then it would have to bear the cost while being in the loss.
If it sticks in China, then they have to pay the tariffs, which would lead to the price increase. A Bloomberg report estimates that Apple could suffer a loss of 6 to 7 percent if it sticks with Foxconn in China.
A ray of hope
Even though the current situation for Apple is looking gloomy, the future could change.
US and Chinese official are expected to meet at the G20 Summit in Japan in June. Apple would be hoping that things get resolved between the two superpowers; otherwise, it could suffer a significant loss.