You’re About to Pay a lot More for an iPhone

By Douglas A. McIntyre Published Feb 3, 9:15AM EST

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Apple Inc. (NASDAQ: AAPL) relies heavily on China for its supply chain and manufacturing.
iPhone sales are bound to take a hit from new tariffs on imports from China.

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You’re About to Pay a lot More for an iPhone — © Deagreez / iStock via Getty Images

Tim Cook wouldn’t say exactly how much China tariffs will hurt Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) sales, particularly the iPhone. The Telegraph reported, “Apple is heavily reliant on China for its supply chain and manufacturing, despite efforts to move production to India and Vietnam.”

What would be much worse, but is possible, is that the Chinese government could block iPhone sales completely and favor local companies Oppo and Vivo, which are already well ahead of Apple in China market share. This has been a major drag on Apple’s share price.

In the most recent quarter, both iPhone sales and Greater China sales were weak. iPhone sales were down a fraction to $69.1 billion. Greater China sales fell from $20.8 billion a year ago to $18.5 billion.

Apple is also struggling with the fact that its artificial intelligence (AI) functions are considered unimpressive compared with other products in the field. The opinion is that the Chinese smartphone companies have better AI, particularly because it is tailored for the local market.

Apple has another problem. Its successful Services business rose year over year from $23.1 billion to $26.3 billion. Though that makes it the second largest part of Apple’s revenue, it does not make up for iPhone weakness.

Apple cannot afford more mediocre iPhone sales. The smartphone has been Apple’s flagship for a decade.

Tariffs will make iPhone prices higher. That adds to the headwinds already in place.

Apple Stock Is Floundering, and AI and China Are Making Everything Worse

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.