Core Market and Manufacturing Hub

Cook reaffirmed Apple’s commitment to China’s “supersized market and full-fledged industrial system,” as stated in the official meeting summary. The country remains both a critical supply chain hub and Apple’s second-largest market, generating $66.95 billion in FY 2024 despite a 7.73% annual drop. Q1 2025 China revenue fell 11.1% to $18.5 billion, the steepest decline since FY 2024.

IDC data shows Apple shipped 10.8 million iPhones in China in Q3 2025, up 0.6% YoY, reaching 15.8% share and second place. Growth was driven by the base iPhone 17 model. Yet Huawei’s resurgence underscores structural challenges: iPhone sales dropped 18.2% in Q4 2024, pushing Apple to third. By Q2 2025, Huawei led with 18% share, while Apple was fifth at 15%. Q3 2025 revenue rebounded slightly to $15.37 billion, aided by promotions during the 618 shopping festival.

Cook described China as “the most competitive market in the world.” Huawei’s HarmonyOS 5.0 Nova 14 series has tightened this competition, whilst regulatory restrictions on generative AI block Apple Intelligence features on China models, limiting differentiation.

Tariff Escalation and Cost Implications

Trump’s tariff measures in 2025 have reshaped Apple’s cost structure. Tariffs began at 10% in February, escalated to 145% by midyear, then temporarily eased to 30% under an August truce. The truce expires November 10. On October 10, Trump announced a new 100% tariff on Chinese goods starting November 1, alongside export controls, causing major market declines.

Apple projected $900 million in tariff-related quarterly expenses in May, later revised to $1.1 billion. Smartphones received exemptions from the highest tariffs, and Apple secured semiconductor exemptions through US manufacturing commitments.

India Rising, But China Dominates

Tariffs accelerated Apple’s diversification. Cook stated most iPhones for the US will soon come from India. Apple assembled $22 billion worth of iPhones there in the 12 months to March 2025, a 60% YoY rise. In H1 2025, production grew 53% to 23.9 million units; exports hit $22.56 billion. India became the top smartphone exporter to the US in Q2 2025, supplying 44% of imports. Manufacturing iPhones in the US is seen as economically unfeasible, with potential prices near $3,500.

Market and Policy Volatility

Trump’s October tariffs reflect an aggressive second-term trade stance. Effective rates could exceed 130%. Broader tariffs now affect furniture, timber, and shipping. US stocks lost $2 trillion in value after the announcement*. China, controlling 70% of rare earths, expanded export controls, intensifying the standoff. Trade volumes between the two countries have fallen, with Chinese exports redirected to emerging markets.

A planned Trump–Xi meeting at the APEC summit is now uncertain. Diplomatic contacts have stalled, increasing policy risk ahead of the November 10 tariff deadline.

Investment Perspective

Apple shares traded between $244 and $259 in October 2025, closing at $247.77 on October 14, down nearly $10 after Trump’s tariff announcement. Year-to-date performance is –1.88%, lagging peers. Tariff exposure, China headwinds, and AI concerns weigh on sentiment.*

Yet fundamentals remain strong. Apple posted record $124.3 billion revenue in Q1 2025 (+4% YoY) and $94 billion in Q3 2025 (+9.6%). iPhone revenue of $44.5 billion beat forecasts. The installed device base and services revenue are at all-time highs.

Strategic Outlook

Apple’s approach balances risk and opportunity. Its China presence remains essential due to unmatched manufacturing capabilities, supplier relationships, and market size. Simultaneously, the company is scaling India and Vietnam production to reduce concentration risk.

Whether this strategy holds depends on geopolitics, Trump’s tariff policy, China’s economy, and alternative hubs’ maturity. Apple is betting its deep integration with China’s economy can withstand external shocks. The November 10 tariff deadline will test that bet.

* Past performance is no guarantee of future results