As the United States and China engage in a tariff war, Apple's production of iPhones and iPads for the second quarter of this year is being upwardly adjusted. This is interpreted as a response to consumer demand to stock up on inventory due to the uncertainty of tariff policies and to purchase products before the tariffs take effect. With the Trump administration indicating that it would adopt a flexible tariff policy for smartphones and other devices, domestic Apple partners who were concerned about price reduction pressure from tariffs have found some relief.
According to Morgan Stanley on the 16th, Apple's expected production volume of iPhones for the second quarter has been upwardly adjusted from 41 million units to 45 million units. This is expected to be an increase of about 15% compared to the same period last year. The production forecast for iPads has also been adjusted upward from 11.5 million units to 13 million units, which is projected to be a 24% increase compared to the same period last year.
With the U.S. government's tariff policy changing overnight, the uncertainty has grown, leading to analyses that it is a measure to quickly secure products before the tariffs take effect and to raise inventory levels in various countries. Morgan Stanley noted that this is "to maintain the inventory levels of Apple-related models," and it is expected that production in India will also be significantly increased to diversify production bases due to tariff uncertainties.
The news of increased production from Apple is positive for domestic Apple component suppliers such as Samsung Display, LG Display, and LG Innotek. Samsung Display and LG Display supply display panels for iPhones and iPads, while LG Innotek provides camera modules. Last year, LG Display and LG Innotek's shares related to Apple were approximately 54% and 81%, respectively. It is also understood that more than 40% of Samsung Display's revenue comes from Apple.
As President Trump stated that a "flexible tariff" would be applied to mobile and semiconductor products, concerns over price reduction pressure due to tariffs are expected to diminish. The U.S. government announced on the 11th (local time) that "smartphones, semiconductors (including SSDs and equipment), etc. will be excluded from the ‘reciprocal tariffs’ imposed by the U.S. government."
Initially, there were concerns that the Trump administration's imposition of high tariffs on China (145%) and Vietnam (46%), where Apple's production bases are located, would intensify price reduction pressure on component suppliers. If manufacturing costs rise due to tariffs, Apple would inevitably take measures to defend its profit margins by raising product prices, but since it can't pass the cost burden solely onto consumers, it can't be ruled out that it may demand price reductions from component suppliers.
An industry source stated, "The models being produced in the second quarter are products already launched last year," adding that "With the release of new products like the iPhone 17 in the second half of the year, overall production is expected to increase, and if we can also break free from tariff pressures, it could act as a boon."