A Bank of America Merrill Lynch analyst has stated that Apple could increase the price of the iPhone by 20% if it responded to President Trump’s repeated requests for firms to move more of their operations to the United States. The assessment was made based on a scenario where Apple asks Hon Hai and Pegatron to move a small portion of their iPhone manufacturing to the U.S., and the costs would be a result of labour costs.
Wamsi Mohan, a research analyst at Bank of America Merrill Lynch, said:
“Back to US' manufacturing seems to be back on the agenda for President Trump … We believe Apple could ask Hon Hai and Pegatron to shift a small portion of their iPhone manufacturing to the US in response to President Trump's request. The conclusion was for the iPhone (not currently impacted by Tariffs) moving production (100% of final assembly) to the U.S. would need 20% price increases to offset the incremental labor costs.”
While a 20% increase is quite an alarming rise for Apple fans, Mohan says that the most likely scenario will be that Apple will move 10% of its iPhone assembly to the U.S., while the average price of an iPhone will increase by 8%. With this sort of increase the $999 iPhone X model would cost $1,080. If Apple moves 50% or 100% of iPhone assembly to the U.S., iPhone prices would increase by 14% and 20% respectively.
The analyst has downplayed the idea that Apple will bring non-assembly factories to the U.S. because of high labour costs. U.S. workers are paid 2.6 times that of a Chinese worker. If Apple did do this, customers would face significantly higher costs.