One key iPhone maker is considering moving production of the smartphone to the United States, according to the Nikkei Asian Review.
“Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.,” the Nikkei Asian Review reported, citing a source.
“Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.”
Apple declined to comment when contacted by CNBC. However, Apple has long said the barrier to moving iPhone production to the U.S. is expertise, in addition to cost.
“Foxconn follows a strict company policy of not commenting on any matters related to current or potential customers, or any of their products,” a company spokesperson told CNBC via email.
Taiwan-based Foxconn and Pegatron assemble iPhones in China.
The news comes following Donald Trump’s victory in the presidential election. The Republican president-elect has been vocal about how U.S. companies should be building their products in America.
“We’re going to get Apple to build their damn computers and things in this country instead of in other countries,” Trump said in a speech in January.
He also said that he would slap a 45 percent import tariff on Chinese goods. But Beijing has hit back: In an opinion piece published in a state-backed newspaper, the Chinese government warned that iPhone sales and other American goods could suffer if such a plan were to go through.
“A batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the U.S.,” the Global Times article read.
Manufacturing the iPhones abroad allows Apple to maintain a strong margin on its product.
Apple is Foxconn’s biggest customer but Chairman Terry Gou is worried about the rising production costs of such a move, the Nikkei reported, citing a source saying that costs will double. It’s important to note that the discussions began in June, five months before Trump won the election.
Analysts said it is still hard to quantify what such a move would mean for Apple’s finances, but warned that there will be an impact.
“If the world moves to a more nationalistic approach ‘made in America, by Americans, for Americans’ or ‘made in China, by Chinese, for Chinese’… these variable conditions will likely impact margins, growth and suppliers exposed to the globalization trend of the last decade,” wrote Neil Campling, head of global technology, media, and telecoms research at Northern Trust Capital Markets, in a note on Friday.
“The same will likely make global tech a tougher place to invest in 2017,” he said.
