1 week Ago By Varun Godinho
Weathering the impact of President Donald Trump’s tariffs, Luxshare Precision Industry, a key assembler of the iPhone and other Apple products including the Vision Pro will maintain its large production hub in Vietnam. While Trump has escalated the tariffs on China, a country where Apple relies heavily on for assembly of its iPhones to 125%, Vietnam is facing a much lesser tariff rate of 46%. Executives of Luxshare, a China-based contract manufacturer of electronics, said at an investor briefing Wednesday that major clients are weighing moves to shift production to regions facing lower tariffs than China, reported the Wall Street Journal.
The tariffs primarily apply to finished goods exported to the US, meaning component exports unaffected, the executives said. They added that Luxshare continues to do much of its component and module production in China, and Vietnam can meet most of the demand for US-bound shipments of finished goods. The executives added that Chinese companies which have already invested significantly into Vietnam’s manufacturing capabilities aren’t likely to abandon the country, unless they are certain that Vietnam’s tariff rate will remain significantly higher in the long term.
Luxshare said that it some operations in India, but isn’t in the process of expanding there unless their clients specifically ask them to do so. Importantly, Luxshare executives noted that its clients will absorb the cost of tariffs, not Luxshare itself. On the possibility of manufacturing consumer electronics in the US, Luxshare founder Grace Wang said that move could be extremely difficult, without ruling out the possibility entirely.
As ChannelNews has already reported , moving production of devices such as iPhones to the US could result in potential doubling or even tripling of its prices. The Bank of America has said that Apple could move iPhone production to the US, but it would nearly double the cost of making the device. “iPhone cost can increase 25% purely on higher labour cost in the US,” BofA analysts led by Wamsi Mohan wrote in a note on Wednesday, reported Bloomberg.
However, a “significant portion” of parts used in the iPhone would still need to be assembled in China and imported to the US. This could result in a total cost rise of 90% or more, they estimated. Wedbush Securities analyst Daniel Ives meanwhile has forecasted that US-made iPhones could cost more than three times their current price because it would be necessary to replicate the complex production ecosystem that exists in Asia.
“You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They’ll be $3,500 (A$5695) iPhones,” he told CNN..
