"I had a little problem with Tim Cook yesterday..."
Arjun Kharpal
Poor Tim Cook. Guy just can't seem to catch a break recently. Aside from the whole AI shitshow, the App Store fiasco, the EU fines, mixed earnings, and the tariff kick in the head, now he may have a new headache related to the latter:
U.S. President Donald Trump on Thursday said he told Apple CEO Tim Cook that he doesn’t want the tech giant to build its products in India, taking shots at the company’s moves to diversify production away from China and urging him to pivot Stateside.
“I had a little problem with Tim Cook yesterday,” Trump said. “I said to him, ‘my friend, I treated you very good. You’re coming here with $500 billion, but now I hear you’re building all over India.’ I don’t want you building in India.”
To be clear, I'm not sure how big of a problem this will actually be for Cook and Apple. As we're all well aware by now, the President tends to say things for reasons ranging from off-the-cuff remarks to more calculated PR statements that don't ultimately amount to much, if anything. Still, this has to be worrying to Apple. And to Apple shareholders. Basically the entire plan to move iPhone manufacturing away from China rests on the ability to ramp up Indian production.
“I said to Tim, I said, ‘Tim look, we treated you really good, we put up with all the plants that you build in China for years, now you got build us. We’re not interested in you building in India, India can take care of themselves ... we want you to build here’,” Trump said.
I'm going to assume "build us" is a transcription error meaning to say "build US", but really, it doesn't matter, the entire statement is pure gold, the real kind, not the tacky shit you might find in a Trump property. I mean, the President of the United States is giving public comments about what until recently was the most valuable company in the world that sounds more like they're straight out of a mobster movie.1
Those are some nice manufacturing facilities you got over there China and India, would be a shame if something happened to them...
The reality remains that Apple is not going to build the iPhone in the US, no matter how many thinly-veiled threats the President makes. The economics simply do not work. The iPhone would shoot up in retail price from around $1,000 to $3,000 or more. And that, in turn, would collapse demand for the product. The iPhone is an amazing product, perhaps the pinnacle of tech hardware to date, but it's not going to fly at 3x (or more) the current cost. Just ask the Vision Pro.
(And even beyond the costs, it would take years to ramp up production in the US, as the country doesn't have the specific capacities – nor specifically skilled workers – required to make that particular supply chain happen any time soon.)
And that, in turn, would cause a perpetual spiral for Apple, where their stock starts to collapse on weaker iPhone sales (since the product still makes up roughly 50% of their overall revenue each quarter – often more). And it would really hurt their overall profitability and cash flow, which in turn would mean less money to spend on R&D, let alone dividends. And that would make the stock even less attractive. And round and round we'd go, until Apple was a shell of their former selves. All because the President (and really, his advisors) clearly don't understand the economics of how this all actually works.
But again, the above may just be a comment made in passing to get some headlines for Trump's ongoing trade wars. And it has the added belittling benefit of showcasing to Cook and Apple who is really in charge.
Cook, in turn, may have to promise yet more investment in the US, while carefully pretending that it will be meaningful to Apple's overall business, when of course it really won't – certainly not compared to what is going on in China and India. Better yet, he'll probably try to reposition old initiatives to give the President a "new" "win" to brag about.
The U.S. president added that Apple is going to be “upping” its production in the United States, without disclosing further details.
The devil is in those details, which are always light and/or missing. But that's not really the point, is it?
One more thing: while I appreciate the image CNBC used in their story (from a White House meeting in 2019) because Cook looks appropriately miserable given the headline here, Benjamin Mayo of 9to5Mac found a far better one for this news (clearly from a different White House meeting, judging from the ties):
While I don't think all of the other shitstorms currently surrounding Apple are going to cause Cook to retire any time soon – namely because he's the one person best suited to work with President Trump, not to mention Apple's supply chain partners – you have to wonder if Trump might push him in that direction...
"My friend, I treated you very good."
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Not only has Microsoft overtaken Apple in terms of market cap, NVIDIA has once again as well...