The past couple of trading days have been brutal for Apple because the technology giant was not prepared for the roller coaster of a ride when President Donald Trump announced a series of tariffs that will affect regions where the company has established its comprehensive supply chains. The aftermath of the announcement saw Apple lose $250 billion in market capitalization, but the situation has yet to improve, as the three-day trading period has extended those losses to nearly $640 billion, making it almost 20 percent of the California-based giant’s total value.
Analysts continue to prattle that Apple needs to raise the prices of its products or shift iPhone production to regions that have been least affected by the tariffs
Despite diversifying its supply chain, Apple has continued to rely on China. Unfortunately, the U.S. has a personal vendetta against the country, and with the latest tariff announcement, the region will be subject to 54 percent in levies. With the Cupertino firm stranded between a rock and a hard place, CNBC reports that it has continued to receive a hammering to its market capitalization.
With almost 19 percent of its total value wiped out, Apple’s worth is now $638 billion less than it was three days ago. Whatever decision it makes regarding its new pricing structure will have the same consequence. If it chooses to raise the prices, it will result in lowered demand, reducing its annual revenue. Assuming it absorbs those costs and passes the savings to customers, it will once again face the same outcome.
TF International Securities’ analyst Ming-Chi Kuo previously mentioned that if Apple keeps the prices unchanged, its gross margin could witness between an 8.5 - 9 percent drop. He has mentioned some recommendations that will allow the company to alleviate its losses, starting by moving iPhone production to India. If the region obtains exemptions from these tariffs, Apple can ask its supply chain to pick up the momentum.
If one of Trump’s goals was to shift iPhone production to the U.S., Bloomberg’s Mark Gurman says that there is no universe where something like this will happen. Even without the tariffs in place, the increased labor costs and other overheads will force Apple to raise the prices of its iPhones, which is why it has always stuck to maintaining its supply chain overseas.
News Source: CNBC
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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