Wednesday, 21 May 2025
26.1 C
Singapore
30.3 C
Thailand
20.9 C
Indonesia
29.5 C
Philippines

Apple warns of US$900 million cost increase from tariffs despite strong quarter

Apple warns of a US$900M cost increase from tariffs despite strong earnings as trade policy uncertainty clouds next quarter.

Apple has reported impressive earnings for the year’s second quarter, bringing in US$95.4 billion in revenue and US$24.8 billion in profit. But even with those strong numbers, the company has warned that the next few months could be more difficult because of growing concerns over tariffs.

Tariffs could increase costs by US$900 million

During the quarterly earnings call held on May 2, Apple CEO Tim Cook shared that the impact of tariffs was relatively small last quarter. This was mainly due to Apple’s ability to manage its supply chain and adjust inventory efficiently. However, he cautioned that the June quarter might not be as easy to navigate.

Cook explained, “For the June quarter, currently, we cannot precisely estimate the impact of tariffs, as we are uncertain of potential future actions before the end of the quarter. However, for some colour, assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add US$900 million to our costs.”

He also clarified that this number should not be used to predict future quarters since the June quarter has some unique conditions that may not repeat.

US tariff policies remain unclear

Recently, former President Donald Trump temporarily decided to exempt a range of tech items from tariffs. These include phones, laptops, hard drives, processors, memory chips, GPUs, semiconductors, and the machines used to make them. While this may offer short-term relief, Trump also mentioned that this would not last.

He said these products would later be moved into a “different Tariff ‘bucket’.” However, no details have been shared about what this new tariff category would involve or how high the new tariffs might be. The lack of clarity makes it difficult for companies like Apple to prepare for what’s coming.

Apple shifts production to reduce risk

To manage these uncertainties, Apple is continuing to shift its manufacturing operations. Tim Cook shared that most iPhones sent to the United States now come from India. Meanwhile, Apple’s Macs, iPads, AirPods, and Apple Watches will be mainly shipped from Vietnam. Devices produced in China will be sent to customers outside the United States.

Cook did not confirm or deny that these added costs could lead to customer price increases. He replied, “We have nothing to announce today. I’ll say that the operational team has done an incredible job optimising the inventory supply chain, and we’ll continue to do those things to the degree we can.”

Still, many experts believe Apple will never be able to absorb such a large cost. A recent analysis suggested that iPhone prices in the US could increase by as much as 43% if the full set of proposed tariffs—referred to as “reciprocal tariffs”—are pushed through.

Apple’s ability to manage its supply chain may ease the burden in the short term, but the long-term effects of changing trade policies could still seriously impact prices and profits.

Hot this week

NVIDIA introduces NVLink Fusion to support semi-custom AI infrastructure

NVIDIA launches NVLink Fusion to support semi-custom AI infrastructure, enabling faster integration of CPUs and GPUs for scalable AI factories.

NVIDIA expands Omniverse Blueprint to support AI factory digital twins

NVIDIA expands Omniverse Blueprint with new tools and partners to support digital twin simulations for AI factory infrastructure.

Nubia Z70S Ultra launches with an invisible front camera and a stunning display

Nubia Z70S Ultra debuts with a hidden front camera and flagship specs for uninterrupted viewing and top-tier photo performance.

Spotify changes podcast play count plans after backlash

Spotify updates podcast play count feature after criticism, limiting visible data to shows with 50K+ plays and using milestone markers.

Protelindo speeds up operations and cuts SAP migration time in half with UiPath

Protelindo improves operations and halves its SAP migration time with UiPath automation, boosting efficiency and employee upskilling.

Xiaomi launches 3-nanometre chip to rival Apple and Qualcomm

Xiaomi unveiled the 3-nm XRing O1 chip for its new phone and tablet, matching Apple and Qualcomm in the global semiconductor race.

US buyer activity rises on Alibaba.com after tariff pause agreement

US buyers flood Alibaba.com after a 90-day US-China tariff pause, boosting inquiries by over 40% and driving holiday stock orders early.

Razer’s new Blade 14 is thinner, lighter, and packed with full RTX 5070 power

Razer’s new Blade 14 is thinner and lighter, with full RTX 5070 power and a stunning OLED display. It starts at US$2,299.99.

Microsoft brings on-device AI to web apps in the Edge browser

Microsoft adds on-device AI to Edge, giving web apps access to Phi-4-mini for smart features like text editing and translation.

Related Articles

Popular Categories