As Christmas approaches, Cook received a birthday present from Trump that would reassure him. Apple benefited significantly from the temporary trade deal signed with China early on December 13, according to the New York Times, and several new iPhones will not be subject to an additional 15 percent tariff this year. That said, Apple doesn’t have to face the dilemma of losing money or raising prices for the iPhone. What’s going on? Trade frictions between China and the U.S. have been going on for 20 months.
Late Thursday, U.S. time, Mr. Trump agreed to lower tariffs on $360 billion in Chinese goods in exchange for China’s promise to buy U.S. agricultural products and make other concessions. As part of the plan, the 15 percent tariff, originally scheduled for this weekend, for $160 billion in Chinese consumer goods will be temporarily lifted.
That is, December 15 was supposed to be Apple’s “deadline” when, if the U.S. government’s strategy doesn’t change, Apple would have to pay an additional 15 percent tariff on the iPhone and ask Apple to absorb the extra cost itself, which is obviously unrealistic and, more likely, the iPhone. With the price going up again, the price of the iPhone 11 Pro will go up by about $150.
Bloomberg quoted An analysis by Dan Ives, an analyst at Wedbush Securities, as saying that Apple’s choice to maintain its current price after the tariff took effect on December 15 would reduce the company’s earnings per share by about 4 percent, or about $0.50, by 2020, and consumer demand would fall by 6 percent if Apple chose to raise prices. 8%。
In fact, Apple is already paying extra tariffs on products such as the Apple Watch, AirPods, iMac and HomePod, which rose from 25 percent to 30 percent on October 1 this year, though Apple didn’t choose to raise prices.
Mr Bloomberg described it as “a Christmas gift from the US government to Apple” and a “no price increase” for Apple’s delicate situation in China.
Apple has been preparing for trade friction. On the one hand, Cook has been actively lobbying Trump to eliminate tariffs on Apple products, and on the other, Apple is gradually moving its production line out of China, which has considered moving production of its premium models to India to avoid tariffs. Vietnam, Mexico, Indonesia and Malaysia are also under consideration.
Cook’s previous lobbying has played a role, and in September Apple reached an agreement with the Trump administration to keep the Mac Pro in the U.S., where the product line would be exempt from tariffs. Mac Pro, a high-priced, small-market product, can adopt such a strategy, but it is clearly not cost-effective for the iPhone to remain in the U.S., and the two sides will continue to pull, and the iPhone is not yet completely “safe.”
Sales are in trouble, apples want a big one?
For Apple now, if the tariff increase has not been delayed, it can be said to be “worse”.
On Thursday, brokerage Credit Suisse reported that shipments of the iPhone in China fell 35% year-on-year in November, the second consecutive double-digit decline in Apple’s handset shipments in China, mainly due to lower-priced iPhone 11 Sales are low.
Analyst Matthew Cabral said iPhone sales in China fell 10.3% year-on-year in October, with total shipments in China down 7.4% year-on-year since the launch of the iPhone 11 series. It’s down 17.5 percent.
Apple’s volume in China fell 28% year-on-year in the third quarter, with a 5.1% share, lagging behind Huawei, vivo, OPPO and Xiaomi, according to Market Research firm Canalys.
This doesn’t seem to be in line with our impression that the iPhone 11 was considered Apple’s most cost-effective iPhone in years, and that the 64GB version has stabilized below 5,000 yuan in the e-commerce channel’ offers, and many believe that this generation of iPhones will not sell worse, at least not worse than last year.
But with the data in front of us, iPhone sales don’t seem to be as good as they were last year. This may be a multi-faceted reason, 5G before the arrival of the change of engine downturn, for Apple such a year a big update of the product, seems to have a particularly big impact, there are many signs that next year’s 5G iPhone seems more worthy of expectation, many potential consumers also choose to hold on to the currency; The iPhone 11 also failed to take the lead, with some consumers opting for home-grown brands, with data analytics firm Quest Mobile showing that in the first half of 2019, about 46 percent of iOS users switched to Android, up 2.8 percent from the same period last year.
Against this backdrop, you can see how much apple’s performance in the Chinese market would be affected if additional tariffs were continued.
But the good news is that without tariffs, the iPhone can at least maintain its current prices, while other product lines that have already been taxed have the hope of a small wave of price cuts.
For Apple, such eye-popping data is also completely unacceptable. Everyone seems convinced that next year’s 5G iPhone will allow the iPhone to replicate the brilliant sales it achieved when the iPhone 6 was upgraded.
Bank of America Securities this week raised Apple’s share price target by another 7 per cent, and analysts say the iPhone will maintain sales of more than 200 million units over the next few years, driven by 5G. Tianfeng International predicts that Apple will update four 5G-enabled iPhones next fall, with no significant price increases.
This Christmas, whether apples can have a good time, we will see if you can get through this pass.