Foxconn can make all iPhones outside of China (if necessary)

Apple has sufficient iPhone production capacity outside China to meet the needs of the US market.                  Angela Lang  CNET

Apple has sufficient iPhone production capacity outside China to meet the needs of the US market. Angela Lang CNET

Assuming that Apple wouldn't pass on the added cost to consumers - which is a fair assumption - J.P. Morgan anticipates that Apple's gross margins would fall by 4% and that the company, as a result, would see a discernible drop in earnings.

However, Apple hasn't requested such a transfer of production capacity from China to other markets, he said, albeit Hon Hai is ready to "respond swiftly" if needed. With President Donald Trump threatening Beijing with imposing new tariffs on about $300 billion worth of Chinese goods, the giant of Cupertino will have a complicated situation to deal with.

Apple has already suffered a major dip in iPhone sales in recent years, this new tariff could lead to the extra cost passing on to the United States consumer, further pushing them to Apple's competitors notably Samsung.

Apple now has a large iPhone manufacturing base in China - thanks to Foxconn, the Taiwanese based manufacturing company.

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A ban on Apple iPhones being made in China could hit the firm's bottom line, but Apple's main manufacturing partner, Foxconn, has revealed it has enough capacity to produce US-bound iPhones outside of China.

"25pc of our production capacity is outside of China, and we have enough capacity to meet Apple's demand in the USA market", Foxconn director, Liu Young-way, said at a company investor day.

Liu said Foxconn has production facilities in 16 countries globally, and 25 percent of the company's production capacity is outside of China. The company will respond swiftly and rely on localized manufacturing in response to the trade war, just as it foresaw the need to build a base in the US state of Wisconsin two years ago, he said.

"Well, it now the Chinese have not targeted Apple at all". But there's Winston, which assembles Apple devices in India, however, they are mostly older models like the iPhone 6S. We don't think that Apple will keep a low profile if this starts to affect their business as well.

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