Apple CEO Tim Cook said on Thursday that most of the iPhones sold in the US in the current financial year quarter will be sourced from India, while iPads and other devices will come from Vietnam as the company works to avoid the impact of President Trump’s tariffs on its business.
Apple’s revenue in the first three months of the year remained above Wall Street expectations due to high demand for its iPhones, and the company said revenues had a limited impact on fiscal year’s second-quarter results.
For the current quarter, if things don’t change, Apple expects tariffs to result in a $900 million increase in its costs, Cook added, but Cook said the company is “confident” in the business.
California-based Cupertino earned $24.78 billion, or $1.65 per share, in the first three months of the year, up 4.8% from $23.64 billion, or $1.53 per share, in the year-ago period.
Revenue surged 5.1% from $90.75 billion to $95.36 billion.
Analysts were expecting,
Earnings per share at $1.62 billion on average revenue of $94.19 billion, according to the truth settled survey.
The January-March data reflects how Apple was performing before President Trump announced massive tariffs in April that shook financial markets amid fears that the trade war would re-ignite inflation and push the U.S. economy into recession.
Thomas Monteiro, an analyst at Investing.com, said, “While it is likely that some of the increase in sales was due to a surge in purchases ahead of the expected tariff hike by consumers, margins on the other side of the balance sheet remained healthy.” He added that the company “still has room for strategy”
about the economic background and “there will probably be no need to significantly reduce the cash reserves to move the needle.”
Apple’s reliance on Chinese,
factories to make its iPhones and other devices pushed the technology trendsetter into the clutches of Trump’s trade war. Apple’s share price dropped 23 percent after the president announced the intensification of bilateral tariffs, temporarily eroding shareholders’ wealth of $773 billion in the process.
Much of those losses have been offset after Trump temporarily exempted iPhones and other electronics from tariffs, but Apple shares have fallen nearly 5 percent since tariffs were cut in April.
In addition to the trade war, Apple has also been hurt by its failure to live up to its publicity about artificial intelligence features in the iPhone 16 lineup that emerged last fall.
When the iPhone 16 went on sale, the technology wasn’t ready. Some artificial intelligence features have been introduced in some parts of the world as part of software updates, but Apple still hasn’t been able to live up to its original promise of making Siri smarter and more versatile. The missteps forced Apple to end advertising campaigns promoting artificial intelligence successes on the iPhone, although the company still plans to release more technology-driven features at some point.
Apple was relying on a late entry into the artificial intelligence craze to revive demand for the iPhone as its sales fell 2% from 2023 levels last year. Apple on Wednesday said sales of its phones rose 1.9 percent to $46.84 billion in the first three months of the year. Wall Street had expected iPhone sales of $45.62 billion (about $140 per person in the US).
However,
the company’s China business continues to decline, with revenue from the Greater China Region falling 2.3 percent to $16 billion during the quarter. Other regions, including the United States, Europe and the rest of Asia, saw an increase in sales.
When Trump initially indicated that 145 percent tariffs on Chinese-made products would apply to the iPhone, American consumers turned to stores to buy new devices. But a wave of fear
The purchase will not appear until Apple reports April-June quarter results this summer.
Trump’s trade war has increased pressure on Cook to act in a similar diplomatic manner that enabled the iPhone to be protected from being affected by Chinese tariffs that the president imposed during his first administration.
Cook indicated his intention to maintain a good relationship with Trump by organizing private meetings with him and personally donating $1 million to the president’s second inauguration ceremony before he sat on the stage before trump was sworn in on January 20. Apple then announced plans to invest $500 billion in the U.S. while recruiting 20,000 workers over the next four years.
According to the Financial Times,
According to a recent report published in the Financial Times, Due to Trump’s trade war, Apple is being urged to move all production of iPhones sold in the US from China to India, where the company has been building its supply chain for the last seven years. But the complex logistics of taking such a big step likely could not be completed until next year, leaving Apple facing the vagaries of Trump’s trade war.
Apple’s stock fell $5.81, or 2.7 percent, to $207.51.