As Donald Trump keeps raising import fee’s on things made in China destined for America?
Apple Computer and other companies are move some of their manufacturing to other places….Not necessarily America as Trump has hoped….
It’s still unclear if Apple’s products will come under the tariffs on toys, games, and consumer electronics, but if they do, Kuo believes Apple will absorb most of the additional costs in the mid-short term while increasing its non-Chinese production locations to avoid rising costs in the long run.
In the mid-short term, if Apple absorbs most of the additional costs due to tariffs, there will be a negative impact on its profits from its hardware business, but the company will reap benefits in its brand image and relationships with suppliers. We also believe that the negative impact on Apple are limited and temporary because the profit from service business is growing, and non-Chinese production locations will gradually increase.
Apple has been expanding production in India and Vietnam as part of a strategy to diversify product manufacturing beyond China. Kuo thinks Apple’s non-Chinese production locations could meet most of the demand from the U.S. market after two years. Specifically he believes iPhone, iPad, and Apple Watch manufacturing could meet demand as early as next year, but adequate Mac production outside of China won’t be achieved before 2021….
It’s not just Apple….
The trade war between the U.S. and China has dragged on for more than a year with 25% tariffs placed on $200 billion of Chinese goods. President Donald Trump is still threatening to slap duties on another $325 billion of goods. In wake of the intensifying battle, more and more companies announced plans or are considering shifting manufacturing from China.
American personal computer makers HP and Dell could move up to 30% of their notebook production in China to Southeast Asia, Nikkei reported. Apple has asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to India, according to an earlier report from the Nikkei.
Japan’s Nintendo is also going to pull a portion of its video game console production from China to Vietnam, according to Nikkei.
Not only are foreign companies rethinking its production location, a handful of Chinese companies are also leaving China. Chinese multinational electronics company TCL is moving its TV production to Vietnam, while Chinese tire maker Sailun Tire is transitioning its manufacturing line to Thailand, Nikkei reported….