The U.S. government gave various trading countries some relief by ‘pausing’ the tariffs for 90 days, but the Trump administration did not extend the same courtesy to China, a region that houses Apple’s largest iPhone supply chain and will be subject to an eye-watering 125 percent in levies. Given that Foxconn has the world’s biggest production facility in Shenzhen, the California-based giant is running out of options before it finally has to give in and raise the prices of its iPhones, but there could be some way of circumventing this problem. According to some analysts, Apple can heavily market the bigger storage variants of the upcoming iPhone 17 Pro and iPhone 17 Pro Max to the masses and raise its operating margins.
A new estimate claims that Apple tends to pocket between a 10 to 15 percent higher gross margin for the bigger iPhone storage versions
While Apple is slowly bouncing back in the market, what people cannot ignore is that the company lost almost $640 billion in market capitalization in three days following the Trump tariff announcement, which makes up nearly 20 percent of the firm’s total value. Even though there is a 90-day break applied on the levies, the whole world, including Apple, should tighten their belts on what could be a massive price increase on the iPhone 17 lineup. Fortunately, in an investors’ note spotted by AppleInsider, Morgan Stanley analysts believe that there is still a way that the company can absorb these tariffs while making decent margins.
The idea is to lure customers away from the base storage versions of the iPhone 17 Pro and iPhone 17 Pro Max and force them to purchase the higher capacity models. The analysts estimate that Apple makes between a 10-15 percent higher gross margin for each increased iPhone storage version shipped, but there is another condition involved. Alongside producing these iPhone 17 Pro and iPhone 17 Pro Max models in China, Apple should also focus on ramping up manufacturing in India. Currently, India can produce between 30 million to 40 million iPhones annually, and with the U.S. receiving a shipment of 66 million in the last 12 months, certain measures need to be observed to increase this number.
Even if the region has the capacity and manpower to raise the aforementioned figure, Morgan Stanley analysts believe it will still take between six to 12 months, which is a much longer time than the 90-day pause given by the Trump administration. It is also a matter of whether India receives exemption from the Trump tariffs, with TF International Securities’ analyst Ming-Chi Kuo previously commenting that Apple may have to increase the prices of its ‘Pro’ models after all.
