Apple Faces Up To 90% Cost Surge On iPhones If US Tariffs Stick: Analyst Looks At Possible Shift To India, Price Increase

BofA Securities analyst Wamsi Mohan maintained a Buy rating on Apple Inc AAPL with a price target of $250 Wednesday.

Recently, client focus has shifted to the feasibility of manufacturing Apple products, such as iPhones, in the U.S.

Mohan noted while Apple can find labor to assemble iPhones in the U.S., a significant portion of the sub-assemblies would still be manufactured elsewhere, assembled in China, and imported to the U.S.

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This is because, while moving the final assembly to the U.S. may be possible, moving the entire iPhone supply chain would be a much more significant undertaking and would likely take many years, if even possible.

Mohan estimated how the bill of materials (BOM) cost of an iPhone 16 Pro Max would increase if just the final assembly were moved to the U.S., with and without reciprocal tariffs. The analyst noted iPhone costs can increase by 25% purely due to higher labor costs in the U.S. On top of that, if Apple had to pay reciprocal tariffs to import sub-assemblies into the U.S., he noted the total cost of an iPhone would increase by more than 90%.

If Apple does move the final assembly to the U.S., it will need tariff waivers on components/sub-assemblies manufactured globally to make the manufacturing shifts viable.

According to the analyst, Apple has many options to mitigate downside risk. These include sourcing more iPhones from India, raising prices of products/services, pressuring its supply chain for better economics, introducing new products at higher price points and changing the cadence of product releases. Apple could move to a two-year release schedule for iPhones, which may put less pressure on the supply chain to adapt to version changes, as per Mohan.

Apple generally plans for the long term, and unless it becomes clear how permanent the new tariffs are, Mohan does not expect Apple to move manufacturing into the U.S. The analyst, however, expects Apple will continue to diversify its supply chain and also increase production of iPhones in other countries such as India. In the long term, automation (use of robots in manufacturing) can help reduce labor costs.

Mohan projected fiscal 2025 sales of $411.24 billion.

Mohan’s price target of $250 is based on approximately 30 times the analyst’s calendar 2026E EPS of $8.47. The target multiple compares to the 10-year historical range of 16-34 times (median 27 times). Mohan noted that a multiple at the higher end of the historical range is justified given a multi-year upgrade cycle, large cash balance, and opportunity to diversify into new end markets, increasing the mix and diversity of services.

Apple stock tanked nearly 10% Thursday, losing about $300 billion of market cap due to new tariffs. The stock lost 21% in market value over the past seven days.

AAPL Price Action: Apple stock is trading higher by 9.56% to $188.40 at publication Wednesday.

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