No Fine-Tuning This

iPhone: it's all tariff-able.

Last September I was certain I was going to buy a new iPhone. However, two developments have upended that Apple cart: 1) the delay in rolling out Apple Intelligence; 2) the newly-announced tariff on goods from China, where most iPhones are made.

The WSJ shows how the 54% tariff on Chinese imports raises the cost of the materials that go into the iPhone by 54% (from $549.73 to $846.59). If Apple wants to maintain the same profit margin of 50% on materials, the price of the 256GB iPhone 16 would have to rise by 54% (from $1,100 to $1,694). Such an increase in price will cause some customers to choose the iPhone's competitors who are not experiencing similar price hikes, or at least hold off purchasing a new smartphone. Apple sales will suffer, perhaps a lot, which explains why the stock has fallen 28% from its all-time high.

I am firmly ensconced in the Apple ecosystem and will buy a new iPhone when the creaky 2018 iPhone XS Max gives up its ghost, but not sooner. The WSJ:

This tariff matter is far from settled. Our advice is to hold off on stockpiling last year’s iPhones, and make that one in your hand last as long as it can.