All US iPhones could be made outside of China if needed, says Foxconn

A senior Foxconn executive says the company could move production of all US-only iPhones out of China if the current trade war demands it. In the comments reported by Bloomberg and The Wall Street Journal, Young Liu, head of Foxconn's semiconductor group, said: "25% of our production capacity is outside of China and we can help Apple meet its needs in the US market."

"We have enough capacity to meet Apple's demand," Liu said at an investor conference. Apple has not yet ordered Foxconn to move its production out of China, according to Liu.

Apple may need to rethink manufacturing after the entry into force of tariffs of up to 25% by the end of June. The new tariff should apply to the wholesale cost of devices such as phones, laptops and tablets imported from China to the United States, a market on which a third of Apple's iPhone revenue comes from. It would be up to Apple to decide the amount of additional costs to pass on to US consumers. Analysts cited by Bloomberg suggest that the full pass-through of the cost of tariffs could lead to price increases of 9 to 16%, resulting in a drop in demand of between 10 and 40%. Otherwise, fully absorbing the cost could have an impact on Apple's earnings per share of six to seven percent.

Foxconn has every interest in helping Apple, the company being responsible for nearly half of Foxconn's revenue. A drop in demand for the iPhone would cause a drop in Foxconn's manufacturing demand. The manufacturer is already preparing to transfer part of the production of iPhone to India to avoid the 20% import duty applied by this country.

However, given that China plans to retaliate against the Trump government by raising its rates, it will be difficult for Apple to totally escape the impact of the trade war.