Shifting iPhone production to US may add 90% to costs, BofA warns

Shifting iPhone production to the US could significantly raise costs for Apple, according to a note from Bank of America analysts released on Wednesday.

While assembling iPhones domestically is feasible, the move would create substantial logistical hurdles due to the globalised supply chain. Bank of America analysts estimated that relocating just the final assembly of the iPhone 16 Pro Max to the US could increase costs by 25 per cent, driven primarily by higher labour expenses.

If Apple were to face reciprocal tariffs on imported sub-assemblies, the total cost could surge by more than 90 per cent, said BofA analyst Wamsi Mohan. “If Apple does move final assembly to the US, it would need tariff waivers on components/sub-assemblies manufactured globally to make the manufacturing shifts viable,” Mohan explained.

To mitigate these increased production costs, Apple could explore strategies such as diversifying iPhone production to countries like India, adjusting pricing, negotiating better supplier terms, launching higher-priced products, or even changing product release schedules. “Apple could move to a two-year release schedule for iPhones which may put less pressure on the supply chain to adapt to version changes,” Mohan said.

Despite the ongoing debate about domestic manufacturing, BofA does not expect Apple to make any immediate changes to its production strategy. The bank anticipates that Apple will continue to diversify its supply chain, including expanding production in India. Long-term, automation and robotics may help offset higher labour costs in manufacturing.

Attribution: Investing.com