Apple CEO Tim Cook mentioned Thursday that almost all of iPhones offered within the U.S. within the present fiscal quarter can be sourced from India, whereas iPads and different gadgets will come from Vietnam as the corporate works to keep away from the impression of President Trump’s tariffs on its enterprise.
Apple’s earnings for the primary three months of the yr topped Wall Street’s expectations because of excessive demand for its iPhones, and the corporate mentioned tariffs had a restricted impact on the fiscal second quarter’s outcomes.
Cook added that for the present quarter, assuming issues don’t change, Apple expects to see $900 million added to its prices because of the tariffs.
The Cupertino, California-based firm earned $24.78 billion, or $1.65 per share, within the first three months of the yr, up 4.8% from $23.64 billion, or $1.53 per share, in the identical interval a yr earlier.
Revenue rose 5.1% to $95.36 billion from $90.75 billion.
Analysts, on common, have been anticipating earnings of $1.62 per share on income of $94.19 billion, in line with a ballot by FactSet.
The numbers for the January-March interval present a snapshot of how Apple was faring earlier than President Trump’s unveiling of sweeping tariffs in April that rattled the monetary markets amid fears a commerce struggle would reignite inflation and shove the U.S. economic system right into a recession.
Apple’s reliance on Chinese factories to make its iPhones and different gadgets thrust the expertise trendsetter into the crosshairs of Trump’s commerce struggle. The publicity induced Apple’s inventory worth to plunge 23% shortly after the president introduced the severity of the reciprocal tariffs, briefly erasing $773 billion in shareholder wealth within the course of.
Most of these losses have since been recovered after Trump briefly exempted iPhones and different electronics from the reciprocal tariffs, however Apple’s inventory stays down by almost 5% for the reason that April fusillade of tariffs.
Besides the commerce struggle, Apple has been harm by its incapability to reside as much as its personal hype surrounding synthetic intelligence options on the iPhone 16 lineup that got here out final fall.
The expertise wasn’t prepared when the iPhone 16 went on sale. Some AI options have rolled out in elements of the world as a part of software program updates, however Apple nonetheless hasn’t been capable of reside as much as its authentic promise to make Siri smarter and extra versatile. The missteps prompted Apple to drag promoting campaigns selling AI breakthroughs on the iPhone, though the corporate nonetheless intends to launch extra options powered by the expertise in some unspecified time in the future.
Apple had been relying on its late entry into the AI craze to revive demand for the iPhone after final yr’s gross sales dipped 2% from 2023’s ranges. Apple mentioned Wednesday that its telephone gross sales climbed 1.9% to $46.84 billion for the primary three months of the yr. Wall Street had anticipated iPhone gross sales of $45.62 billion.
When Trump initially indicated his 145% tariffs on Chinese-made items would apply to the iPhone, U.S. shoppers rushed to shops to purchase new gadgets somewhat than danger costs spiking larger after the duties started driving up prices. But the flurry of panic shopping for received’t present up till Apple experiences its outcomes for the April-June quarter this summer season.
Trump’s commerce struggle has ramped up the stress on Cook to work the identical diplomatic sleight of hand that enabled the iPhone to keep away from being stung by the China tariffs that the president imposed throughout his first administration.
Cook signaled his intention stay on good phrases with Trump by arranging non-public conferences with him and personally donating $1 million to the president’s second inauguration ceremony earlier than sitting on the dais when Trump was sworn into workplace on January 20. Apple subsequently introduced plans to take a position $500 billion within the U.S. whereas hiring 20,000 staff through the subsequent 4 years.
Trump’s commerce struggle is also prompting a push to Apple to shift all of the manufacturing of the iPhones that it sells within the U.S. from China to India, the place the corporate has been build up its provide chain for the previous seven years, in line with a current story within the Financial Times. But the sophisticated logistics of creating such an enormous transfer probably couldn’t be accomplished till subsequent yr, on the earliest, leaving Apple weak to the vagaries of Trump’s commerce struggle.
Apple’s inventory fell $5.81, or 2.7%, to $207.51 in after-hours buying and selling.
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