According to a new research report from Cowen, Apple recently told its manufacturing partners to moderately increase iPhone production on account of the recent Huawei ban ushered in by the Trump administration. The report, which was obtained by AppleInsider, relays that iPhone production for the quarter will likely see a slight bump from 39 million to 40 million units.
Admittedly, this appears to be something of a negligible increase, but given how closely analysts still look to iPhone sales as an indication of the vibrancy of Apple’s business, every little bit helps. What’s more, it’s certainly an improvement from the December quarter when word surfaced that Apple had asked supply partners to trip production amid lower than anticipated demand.
All that said, it’s arguably harder than ever to accurately forecast how iPhone sales for the quarter and the rest of the year will shape up. In addition to the Huawei ban, there’s also the looming prospect that Trump’s proposed 25% tariff will have a detrimental impact on Apple’s bottom line. While it’s possible that Apple would pass on the added costs to consumers, that would undoubtedly cause iPhone demand to plummet. A more likely scenario would have Apple bear the brunt of the additional cost and take a hit on EPS.
Apple, as one would expect, has been pro-actively urging the Trump administration to reconsider the proposed tariff. Just last week, Apple sent a letter to US Trade Representative Robert Lighthizer articulating that a tariff would bolster non-U.S. companies and “tilt the playing field in favor of our global competitors.”
“U.S. tariffs would also weigh on Apple’s global competitiveness,” Apple’s letter states. “The Chinese producers we compete within global markets do not have a significant presence in the U.S. market, and so would not be impacted by U.S. tariffs. Neither would our other major non-U.S. competitors.
At the end of the day, we’ll remain in the dark about iPhone sales given that Apple last year announced it would no longer be divulging iPhone sales on a quarterly basis.