Apple says most devices will come from Vietnam in India to avoid U.S. tariffs
Apple CEO Tim Cook said Thursday that most iPhones sold in the U.S. in the current fiscal quarter will come from India, while iPads and other devices will come from Vietnam as the company is committed to avoiding the impact of President Donald Trump’s tariffs on the business.
Apple's revenue exceeded Wall Street expectations in the first three months of the year, thanks to high demand for its iPhones, which the company said had limited impact on fiscal second-quarter results.
Cook added that in the quarter, assuming that the situation has not changed, Apple expects to add $900 million in costs due to tariffs, but Cook said the company remains “confident” in the business.
The California-based Cupertino company earned $24.78 billion, or $1.65 a share in the first three months of the year, up 4.8% from $23.64 billion ($23.64 billion) a year ago, or $1.53 a share.
Revenue rose 5.1% from $90.75 billion to $95.36 billion.
According to FACTSET's poll, analysts expect average earnings of $94.19 billion to earn $1.62 per share.
The January-March figures provide a snapshot of how Apple performed before President Trump announced large tariffs in April as the trade war would restart inflation and put the U.S. economy into recession, which shocked financial markets.
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“While some sales growth may be driven by consumers' accelerated purchases ahead of expected tariff increases, profit margins are still healthy on the other end of the balance sheet,” said Thomas Monteiro, an analyst at Investing.com.
He added that regardless of the economic background, the company “still have room” and “may not need to run out of cash reserves to continue moving the needle.”
Apple relies on Chinese factories to make iPhones and other devices to push technology trenders toward Trump's trade war. Shortly after the president announced the severity of the tariffs, the exposure caused Apple's share price to fall by 23%, and temporarily removed $773 billion in shareholder wealth in the process.
Most of the losses have since been recovered as Trump temporarily waived iPhones and other electronics, but Apple's stock has still fallen by nearly 5% since the tariff airports in April.
Apart from the trade war, Apple has not yet been able to expose its own hype around artificial intelligence capabilities on the iPhone 16 lineup released last fall.
When the iPhone 16 started selling, the technology wasn't ready yet. As part of the software update, some AI features have been introduced around the world, but Apple still can't meet its original promise to make Siri smarter and more versatile. The missteps prompted Apple to propose advertising campaigns to facilitate AI breakthroughs on iPhones, although the company still intends to release more features supported by the technology at some point.
Apple has been counting on its late arrival into the AI boom to resume demand for iPhones, as sales fell 2% last year from 2023 levels. Apple said on Wednesday that its telemarket sales rose 1.9% to $46.84 billion in the first three months of the year. Wall Street expects iPhone sales to be $45.62 billion.
But the company continues to see its Chinese operations drop, with revenue dropping 2.3% in the quarter to $16 billion. Sales increased in other regions including the Americas, Europe and other regions in Asia.
When Trump initially said his 145% tariff on Chinese-made goods would apply to iPhones, U.S. consumers were eager to shop for new devices instead of risking price increases after their duties began to raise costs. But until Apple reports results this summer from April to June, the volume of panic buying will not appear.
Trump's trade war has increased pressure on Cook, demanding that Cook work the same diplomatic move as the iPhone to avoid being stauffered by the president during the first administration.
Cook said his intentions were in good contact with Trump, arranged a private meeting with him, and personally donated to the president's second inauguration before sitting on Dais, when Trump was sworn in on January 20. Apple then announced plans to hire 20,000 workers over the next four years to invest $500 billion in the U.S.
According to a recent story from the Financial Times, Trump's trade war also prompted Apple to push all production of all iPhones Apple sells in the United States. According to a recent story from the Financial Times, the company has been building its supply chains for the past seven years. But complex logistics that would not be completed as such a huge move until the earliest next year has left Apple vulnerable to changes in the Trump trade war.
Apple's stock fell $5.81, or 2.7%, to $207.51.
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