New Delhi: Apple has reported better profits than expected in the first quarter of the year, as reported the company had made $95.4 billion in revenue and $24.8 billion in profit. iPhones played a big role in this success, especially in the US and China. However, Apple is now facing a new problem, US tariffs, extra taxes on imported goods are expected to cost Apple around $900 million this quarter.
CEO Tim Cook said that at the start of the year, these tariffs didn’t affect the company much, but things got more difficult as the months went by. He also said it’s hard to guess how bad the future impact will be because tariff rules keep changing. But if things stay the same, Apple will still have to pay a lot more, nearly $900 million more, for the quarter.
To handle this situation, Apple is changing its production plans. Tim Cook shared that most iPhones sold in the US will soon be made in India. This is part of Apple’s bigger plan to reduce its dependency on China. The US and China have been in a trade fight, and both countries have put tariffs on many goods. Although Apple’s products haven’t been hit by the worst tariffs yet, the company is getting ready in case new ones are added.
Because of these trade tensions, Apple is also building up its product stock before any new tariffs start. According to research manager Le Xuan Chiew from Canalys, Apple is expected to keep shifting its US-bound production to India. Right now, most iPhones for the US are still made in China, but India’s production increased a lot towards the end of the quarter.
It’s not just iPhones, Apple is also moving the production of other products like iPads, Macs, Apple Watches, and AirPods to Vietnam. Tim Cook said almost all of these will soon be made in Vietnam for the US market. But for other countries, China will still be Apple’s main manufacturing center. He explained that making everything in one place is risky, so Apple is now working with more factories in different countries.
Even though Apple is facing these a lot challenges, it still did well this quarter. It earned $17 billion from the China market alone, but revenue there went down by 3% despite efforts by the Chinese government to boost the economy. After the earnings report, Apple’s share price dropped more than 3% in after-hours trading.
Experts say Apple’s decision to move production to India brings up some serious questions, like how fast Indian factories can handle the work, and whether this move will make products more expensive. If costs go up, Apple might earn less profit or charge customers more, or maybe both.
