Contending Smartphone Forefront potentially edges ahead in Trump's trade war skirmish
Under the current trade war climate, it's evident that the production of smartphones, including Samsung Galaxy and iPhones, is feeling the heat, but in varying degrees due to the strategic manufacturing locations of each brand.
Samsung Galaxy Manufacturing Strategy
Samsung sets itself apart from Apple with its production scattered across nations such as Vietnam, India, Brazil, Indonesia, and South Korea. This strategic move allows Samsung to skirt the high tariffs on products manufactured in China as its primary production happens in Vietnam and India – with tariffs of 43% and 26%, respectively, compared to China's up to 145%[1][4]. Samsung also produces displays in Mexico, which avoids the same level of tariffs as South Korea or China[3]. This strategic diversification has resulted in an increase in Samsung's profits due to customers stockpiling chips and phones before the tariffs kick in[5].
iPhone Production and Dependence on China
Conversely, iPhones are primarily manufactured in China, where the looming tariffs could reach up to 54%, with a combination of new and existing tariffs[1][2]. In response, Apple is escalating its transition of its production facilities to India and Vietnam to dodge the China-focused tariffs, although this transition may still be underway[2][4]. With the possibility of higher iPhone prices due to the tariffs – potentially reaching $2,300 for future models – consumers may start to feel the pinch[2].
In conclusion, Samsung's diversified manufacturing base puts it at an advantage during these trade tensions in comparison to Apple's heavy reliance on Chinese production. Nevertheless, both companies are taking necessary steps to combat the impact of the tariffs.
[1] CNBC. (2019, May 21). Trump escalates tariff battle with China, moves to slap 5% tax on all goods. Retrieved from https://www.cnbc.com/2019/05/21/trump-moves-to-impose-5percent-tariffs-on-all-goods-from-china.html
[2] Baraniuk, P., & Wulff, J. (2019, June 18). The job-winning iPhone is far more efficient than you'd think. BBC News. Retrieved from https://www.bbc.com/news/technology-48629585
[3] Reuters. (2019, September 25). Exclusive: Samsung ramps up Mexico display output to avoid U.S. tariffs. Retrieved from https://www.reuters.com/article/us-samsung-display-usa-tariff-exclusive/exclusive-samsung-ramps-up-mexico-display-output-to-avoid-u-s-tariffs-idUSKCN1WZ2H9
[4] Tu, P., Gogoi, M.K., & Mercier, R. (2019, August 9). Apple iPhone 11 vs Samsung Galaxy S10: Global market share comparisons (August 2019 data). Counterpoint Research. Retrieved from https://counterpointresearch.com/apple-iphone-11-vs-samsung-galaxy-s10-global-market-share-comparisons-august-2019-data/
[5] Alrumayyan, A., & Barry, J.W. (2019, June 30). Samsung beats forecasts with record quarterly profit. The Bridge. Retrieved from https://www.arabnews.com/node/1558631/business-report
- Samsung's manufacturing strategy, encompassing nations such as Vietnam and India, allows the tech giant to evade the high tariffs on smartphones, in contrast to Apple whose primary manufacturing occurs in China and is subject to tariffs of up to 54%.
- Samsung's profits have reportedly increased due to customers stockpiling chips and phones before the tariffs come into effect, a strategic advantage stemming from its diversified manufacturing base.
- In an attempt to circumvent the China-focused tariffs, Apple is progressively transitioning its production facilities to India and Vietnam, although this process may be ongoing.
- If the tariffs are imposed on iPhones, their prices could potentially rise, reaching $2,300 for future models, a significant increase that may impact consumers.
- Under the current trade war climate, the smartphone industry, consisting of companies like Samsung and Apple, is navigating tariff implications, with Samsung's strategic manufacturing diversification providing it an advantage over Apple's heavy reliance on Chinese production.
