Apple CEO Tim Cook revealed on Thursday that tariffs could increase the company’s costs by $900 million this quarter, as it continues shifting its iPhone production from China to India. Speaking during a quarterly earnings call, Cook said that assuming current global tariff rates and policies remain unchanged for the rest of the quarter, Apple expects to face the additional costs.
Cook explained that Apple has already moved some iPhone production to India in recent years and that the company anticipates most of the iPhones sold in the U.S. will soon be produced there. This marks a significant shift in Apple’s supply chain, partly driven by the U.S. government’s high 145% tariffs on Chinese-made goods under President Trump’s administration.
Although Apple has gradually been diversifying its production, about 90% of its iPhone manufacturing still takes place in China, despite efforts to relocate production. Cook emphasized that tariffs on products made in China, including a minimum 20% levy on iPhones, have impacted the company, despite exemptions for electronics containing semiconductors.
Apple’s stock dropped nearly 4% in after-hours trading, reflecting investor concerns over the ongoing uncertainty related to tariffs and supply chain disruptions. Cook acknowledged the complexity of the company’s supply chain, noting that relying on a single country for production posed too much risk, leading to the decision to diversify.
For markets outside the U.S., Cook confirmed that Apple would continue producing most of its products in China. However, for U.S. markets, production of iPads, Macs, Apple Watches, and AirPods will be shifted to Vietnam.
Despite the challenges posed by tariffs, Apple’s revenue for the January to March quarter rose 5% year-over-year, reaching $95.4 billion, surpassing analysts’ expectations. iPhone revenue also grew by 2%, totaling $46.8 billion. However, Apple’s sales in the Greater China region, including Hong Kong and Taiwan, saw a slight decline of 2%, amounting to $16 billion. This decline is attributed to increasing competition from domestic smartphone manufacturers in China.
There have been ongoing discussions about bringing more production back to the U.S., a goal championed by the Trump administration. However, analysts have warned that the cost of manufacturing iPhones in the U.S. would be prohibitively high, with one estimate suggesting the price of an iPhone could rise to $3,500 if produced domestically.
Apple has pledged to invest $500 billion over the next four years to expand its production outside of China and to navigate tariff challenges. This investment primarily focuses on building server facilities for Apple Intelligence, the company’s AI service, and an academy to train businesses in manufacturing techniques, rather than directly addressing iPhone production in the U.S.
