Trump Said That The United States Can Make iPhones, Apple's Stock Price Plummeted By 10%

The White House has claimed that President Trump believes Apple can fully relocate its iPhone production to the United States. But how much would it cost to make an iPhone in America?

According to Forbes, the cost of manufacturing just one iPhone in the U.S. would range from $30,000 to $100,000, compared to $500 to $600 for an iPhone made in China. Even with optimistic calculations from Musk’s AI group, the cost could rise to $2,000 to $3,000 if production were moved entirely to the U.S.

However, this assumes that both sales remain steady and that most of the supply chain successfully relocates to the U.S. If higher production costs and retail prices result in a significant drop in iPhone sales, the cost per unit could skyrocket to over $30,000.

Trump’s statement about America’s ability to manufacture iPhones led to a brief surge in Apple’s stock, but it quickly turned around. After a nearly 5% increase, the stock plummeted by 5% by market close, wiping out nearly $280 billion in market value. Yet Apple’s current price-to-earnings (P/E) ratio remains high at 28, which is concerning.

As a tech stock, Apple should ideally be experiencing rapid growth, with annual growth rates of 20% or even 50%. However, its actual growth rate is not only far below expectations, but it’s also lagging behind traditional industries like banking. For example, major banks like ICBC and China Merchants Bank have growth rates comparable to Apple, yet their P/E ratios are consistently between 5 and 10. Typically, banking stocks are expected to grow at a steady, conservative pace, while tech stocks like Apple demand high growth rates. A stagnation in growth signals the potential for innovation to stop, making the company vulnerable to being surpassed or replaced by competitors.

Apple has seen little to no revenue growth over the past five years. This signals a precarious situation for the company. Moreover, it has missed every major technological revolution in recent years. For instance, Apple spent a decade trying to develop electric vehicles, only to squander nearly $10 billion in investments and eventually abandon the project. Meanwhile, Xiaomi achieved success in just three years, launching their own electric vehicle to great success.

When it comes to AI, a field far more important than electric vehicles, Apple is similarly lackluster. Currently, the strongest AI companies in the U.S. don’t even rank among the top ten, while Apple is nowhere to be found. The company’s traditional business is no longer growing, and it has missed critical new opportunities.

This “supergiant” — the largest tech company in the world by market cap — now has a valuation of $2.6 trillion. Realistically, considering current market conditions, including the ongoing trade war, its fair market value should be between $500 billion to $800 billion.
The current valuation is exaggerated, and with the unprecedented trade war and tariffs stacking up, what can we expect next?

The result? The situation isn’t hard to predict, though blindly shorting the U.S. stock market comes with huge risks. The U.S. dollar plays a pivotal role in global finance, and if the dollar were to collapse, it could become as worthless as Zimbabwean dollars. In such a scenario, any asset denominated in U.S. dollars would soar. Therefore, the safest bet is to short the U.S. and long China while avoiding betting against U.S. stocks.

Looking at the reverse approach, those who blindly followed previous trends, are bound to be left behind by history.

Currently, some prominent fund managers are holding huge amounts of investor capital at the peak of the U.S. stock market. With leverage added, they seem poised for a margin call — a classic example of the high cost of blindly betting against one’s own interests.

As for Apple’s plan to shift its supply chain to India, this seems pointless. This is not what Trump envisioned. What Trump wants is for Apple to manufacture iPhones in the United States — not in China, Vietnam, or India.

The return of U.S. multinational companies to American soil would be beneficial for both the U.S. and China. It would bring manufacturing back to the U.S., but it would also free up markets globally. Chinese companies can seize this opportunity and establish themselves as global leaders in the coming years.

This could mark the perfect time for Chinese companies to abandon the outsourcing model and focus on building and strengthening their own brands. Chinese firms must have confidence — in their country, their culture, and their brands. Things are moving quickly, and in three to five years, we will see the results.

Reference:
1. Report: Apple car project scrapped after a decade