Apple suppliers to consider moving China iPhone output if tariffs hit 25 per cent

iPhones – mostly made by assembly partner Hon Hai in China and shipped around the world – have so far been spared in a tit-for-tat trade war

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Apple CEO Tim Cook talks with schoolchildren in the US, Nov. 27, 2018. Photo: AP

Published: 10:26am, 13 Dec 2018Updated: 1:36pm, 13 Dec 2018

Apple Inc.’s suppliers will keep making iPhones in China if the US imposes tariffs on the devices – unless those levies skyrocket.

Suppliers figure they can keep production in China at a 10 per cent tariff level but will consider shifting out of the country if the US moves to 25 per cent, according to people familiar with the matter. Apple and its partners are assessing their supply chains as the US and China fight over trade terms between the world’s two largest economies.

iPhones – the majority of which are made by assembly partner Hon Hai Precision Industry Co. in China and shipped around the world – have so far been spared in a tit-for-tat trade war. But President Donald Trump told the Wall Street Journal last month that tariffs could be slapped on smartphones and laptops made in China, the world’s largest manufacturer of electronics.

Apple has long used China as its production base for everything from the signature iPhone to iPads and Macs. The company’s supply chain now spans hundreds of companies, culminating in assemblers such as Hon Hai and Pegatron Corp. Apple did not respond to requests for comment. Hon Hai and Pegatron declined to comment.

Apple’s manufacturing partners are largely beholden to the US company’s wishes. Migrating parts of the sprawling network they underpin will be difficult and the US company seems to be in wait-and-see mode for now, one of the people said. An Apple partner has already suggested alternative locations for non-iPhone production, but the US company has indicated there’s little need to make such a move for now, another person said.