Following up on concerns as to additional tariffs, noted analyst Ming-Chi Kuo released a new investor note on Sunday predicting how President Trump’s tariffs might affect prices. Kuo stated that he believes “the tariff may not impact the prices of Apple’s hardware products” in the United States.
Last week, Trump announced that the United States would impose a 10 percent tariff on another $300 billion worth of good imported from China. The tariffs would begin on September 1st.
Kuo wrote that Apple has likely made “proper preparations” for such a tariff, and that Apple will “absorb most of the additional costs” in the mid-short term. Kuo predicted that “prices of hardware products and shipment forecasts for the U.S. market will remain unchanged” despite the tariff.
The note stated that Apple’s non-Chinese production locations could likely meet “most of the demand from the U.S. markets” for the next two years. Kuo’s logic behind this is based on a combination of “production automation degree” and Apple’s marketshare within the United States. “If the market share of the U.S. market is lower, and the production automation degree is higher, expanding the non-Chinese production capacity” to meet U.S. demand is made easier, Kuo swroteays.
Here is Kuo’s forecast:
1. iPhone. Expanding non-Chinese production capacity is challenging due to the low degree of production automation. We expect that non-Chinese production locations to meet U.S. market demand in 2020.
2. iPad. It’s not difficult to expand non-Chinese production capacity to meet U.S. demand because of the higher degree of production automation and the smaller U.S. market share.
3. Mac. Though its degree of production automation is higher than the iPhone’s, the Mac’s non-Chinese production locations can’t meet demand from the U.S. market until 2021 because of higher market share of U.S. market .
4. Apple Watch. We expect there will be non-Chinese production locations, starting in 2020.
5. AirPods. We estimate that the change of AirPods’ internal design from SMT to SiP will enhance the level of production automation.
Apple has largely escaped the effects of the trade war’s tariffs, with only some accessories being penalized in the process.
Stay tuned for additional details as they become available.
Via 9to5Mac