tariff

Years in the making

According to Bloomberg, Apple increased iPhone production in India by about 53% last year and assembled around 55 million devices in 2025. That’s up from 36 million in 2024,

The company now produces roughly one-quarter of its iPhones in India.

Globally, Apple manufactures about 220-230 million iPhones each year; India's share is rising quickly.

Apple currently assembles all models of its latest iPhone 17 lineup in India, including the Pro and Pro Max versions. At the same time, suppliers such as Foxconn Technology Group, Tata Electronics, and Pegatron Corp also manufacture earlier models, such as the iPhone 15 and iPhone 16, for domestic sales and exports.

The company is also expanding local supplier partnerships in India to produce components such as lithium-ion cells, device enclosures, and accessories, including AirPods.

Source: Bloomberg

NB: The article suggests this is a some tariff-dodging effort. Obviously it's not.

Asymco Bulletin is a digest of all the work we have published for the week ending Feb 22, 2026.

Research

Teen Survey Update: What happens when teens grow up?

Latest data indicates 88% of teens own and intend to purchase iPhones, marking a decade-long trend of increasing adoption. This phenomenon transcends mere functionality; the iPhone has become a cultural icon, symbolizing status and identity.

Unlike other Apple products, such as Apple TV+ or Apple Music, which struggle for traction among teens, the iPhone's appeal is deeply woven into the social fabric, partly due to generational continuity—the children of early iPhone adopters are now loyal users themselves.

In contrast, social media platforms illustrate the fickle nature of tech usage among younger demographics. While Facebook remains prevalent among older millennials, Gen Z gravitates towards Instagram and TikTok, reflecting shifts in cultural preferences and digital behaviors.

For Apple, success in services like Music and TV+ hinges on leveraging existing family dynamics through bundling.

Read More →→→

Apple in Europe: How many iPhone switchers are addressable in the near term?

On the Q4 call, Tim Cook highlighted Greater China’s 38% year-over-year revenue growth, fueled by record iPhone sales, strong upgrade activity, and double-digit retail traffic gains.

Europe, however, drew little attention—despite generating more revenue for Apple than China. This is peculiar.

Europe’s smartphone market shows steady structural gains for iOS. Since 2018, share has risen from 24% to 39%, while Android has fallen from 74% to 60%—a 15-point swing equal to roughly 70 million additional users. With an installed base near 459 million users versus about 300 million in the U.S., Europe combines scale with affluence.

In sum, the pattern for Apple in Europe is not saturation but share transfer, signaling durable competitive strength in a mature market and an inkling of how all markets will eventually behave in maturity.

Read More →→→

Estimating 2035 iPhone Users

In the last quarter Apple reported 2.5 billion active devices. Of those, I estimate 1.6 billion are iPhones.

Using this as a base, I've created an iPhone installed base estimate looking forward to 2030, integrating Statcounter’s market share data, Ericsson’s global smartphone user forecasts, and BankMyCell’s smartphone install base.

The sources broadly align through 2025, though Statcounter’s historical iOS share (2017–2023) diverges somewhat, possibly reflecting Android’s heavier web traffic footprint due to usage patterns and bot activity rather.

Taken together, the data points to iPhone nearing 2 billion active devices by 2030, consistent with overall smartphone adoption. Android’s projected rise toward 4.5 billion users signals continuing headroom.

If switching dynamics and monetization trends persist, Apple’s ecosystem could expand to 2.5–3 billion users by 2035, with growth thereafter driven by switching and increased engagement depth and value extraction per user.

Read More →→→

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Nota Bene

Apple Announces Special Event in New York, London, and Shanghai on March 4 → Apple is hosting intimate, global "Special Apple Experience" events on March 4, 2026, likely unveiling new products like the iPhone 17e and M5-powered MacBooks, marking a fresh twist on traditional live-streamed launches.

Apple adds video experience to Apple Podcasts → The "pod" in podcasts originated from Apple's iPod, with the company popularizing the medium by integrating podcasting into iTunes in 2005, and continuing to innovate with features like video podcast support and dynamic ad insertion.

Why not maroon? The Macalope ponders the power of color → Apple's upcoming lineup, featuring color-excited anticipation for the iPhone 17e and modest updates to iPads, promises subtle yet intriguing tech advancements.

Dan Ives Says Apple’s AI Alone Could Be Worth $1.5 Trillion → Apple's unparalleled distribution through its vast user base offers a significant competitive edge for rapidly monetizing AI innovations, potentially adding $1.5 trillion in value.

While big tech burns cash on AI, Apple waits → As foundation models commoditize, Apple strategically curates top AI tech into its ecosystem, prioritizing user experience over engine development.

Secure the chips, absorb the costs, and grab more market share → Apple faces memory cost inflation potentially raising iPhone prices, yet its strong ecosystem and execution provide resilience, whereas competitors like Samsung may struggle more due to lesser volume leverage.

iPhone Emergency SOS via Satellite Helped Six Skiers Survive Tahoe Avalanche → Six skiers survived a deadly Lake Tahoe avalanche by using iPhone's Emergency SOS via satellite, highlighting its transition from luxury to essential. This feature enabled crucial communication with rescuers in remote areas lacking cellular service. The evolution mirrors mobile phones but faces slower adoption due to satellite bandwidth constraints.

The US Supreme Court has ruled against US President Donald Trump’s decision to impose a raft of global tariffs → Apple and other affected companies may soon seek refunds for tariffs paid, following the Supreme Court's decision to invalidate Trump's tariffs, though the exact timeline and amount remain uncertain.

Bankers complain that Apple has a tight grip on mobile payments → Canadian banks struggled to compete in the mobile wallet market, dominated by tech giants like Apple and Google, due to their risk-averse nature clashing with tech's innovation-driven approach.

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When do we get our money back?

The US Supreme Court has ruled against US President Donald Trump's decision to impose a raft of global tariffs.

Six of the court's nine judges voted to overturn the signature economic policy.

The judgment was in response to an application brought by businesses affected ‌by the tariffs from 12 mostly Democrat-run states.

The applicants challenged US President Donald Trump's use of an executive order to impose the sweeping country-specific taxes.

Trump latest: Tariffs snubbed by Supreme Court

From 2 April, a day described by Mr Trump as "Liberation Day", countries across the world were hit with taxes on their exports.

Source: Threads, Sky News.

Apple’s relationship with China has always been a point of worry for investors. Nine years ago Carl Icahn sold his entire stake in Apple due to China fears. In April 2016 Reuters reported that "Icahn had been a huge cheerleader of Apple, acquiring a stake in the company almost three years ago, repeatedly calling the investment a `no brainer.'" In an open letter to Apple Chief Executive Officer Tim Cook in May 2015, Icahn had argued that shares of the iPhone maker were worth $240 ($60 split adjusted), about 90 percent more than they had been trading. At $240 a share, Apple's market cap would be $1.4 trillion, Icahn asserted. But Icahn, who owned 45.8 million Apple shares at the end of 2015, said China's economic slowdown and worries about how China could become more prohibitive in doing business triggered his decision to exit his position entirely.

Icahn’s stake when he acquired the shares was worth nearly $3 billion and he sold it for about $5 billion. A $2 billion profit. But China worries kept him from holding until today when his shares would have been worth $36.6 billion, thus foregoing $31.6 billion in profit.

Leaving $31 billion on the table (not including dividends) seems a high price to pay for a misidentified anxiety on China.

The public reasoning was: "But you worry a little bit, maybe more than a little, about China's attitude."The Chinese government could `come in and make it very difficult for Apple to sell there … [They] can do pretty much what [they] want there,' Icahn said. Earlier [that] month, China shut down Apple’s iTunes movies and iBooks stores within the country, following Beijing's introduction of regulations in March 2016 imposing strict curbs on online publishing, particularly for foreign firms."

That was 2016. Today the concerns appear to be:

• Slowing sales due to rising competition from Chinese brands
• Slowing sales due to Chinese economic slowdown
• Tariffs and other barriers to trade affecting pricing in the US
• Geopolitical threats to supply chain, including processor manufacturing in Taiwan

Should today's investor worry about China more or less than Icahn did in 2016?

In the case of competition in China, we have to understand that China does not have a free market or "laissez-faire" economy. The clue would be the middle “C” in CCP which, importantly, has a monopoly on political power in China. In spite of an ideology hostile to private property and market economics, the fact that Apple not only is allowed to operate in China but also is the market leader in urban (read: wealthy) areas and indirectly employs millions of workers and empowers millions more developers should be seen as something of a miracle. It continues to operate only insofar as the CCP allows it to continue and the CCP is nothing if not calculating. Clearly, China has seen Apple’s presence in the market (both as producer and seller) as beneficial. One could argue about who benefited most but overall deals happen (and persist) because both parties benefit.

The competition has been improving lately, but when has it not?

Fundamentally, from the consumer point of view, the competition question is moot since the alternatives are not iOS. The iOS ecosystem is incredible from a value-generation point of view, and Android has been clearly contained as a threat. (A nostalgic footnote. Recent talk of Alphabet being forced to sell Android is a wonderful reminder of the question I asked many, many years ago: why should a search engine need an Operating System (or a browser), but more about this later).

Chinese macroeconomic worries are not new (see Icahn’s from 2015). In most economies cycles are natural but in China there has been such a long expansion (since at least the 1990s) that a slowdown is considered a huge threat to stability. A recession would be seen as an existential threat. The CCP intends to manage its way through economic stress—one of the defining aspects of their semi-controlled economy is that “the state knows best” and markets can and should be controlled. This won’t last but the consequences are not likely to be catastrophic. China’s economy is probably large enough to avoid sharp changes which gives management enough time to muddle through. I would not say that this worry is unwarranted but rather that the changes are gradual enough to allow for some strategic planning.

The Tariff question has been partly touched on in a previous post. But the flip-flopping on the topic suggests that it’s a bargaining method similar to holding a gun to your head while threatening someone else that if they don’t do what you ask for, you’ll pull the trigger. Then relenting when they say nice things. Then repeating it.

Tariffs do not affect the customer relationship with the brand.

In 2016 Icahn’s worries were not geopolitical (they were just political) but has the world become more unstable since? The Covid pandemic was the trigger for much of this instability and we are still dealing with the consequences globally. However the bigger forces behind global changes are demographic and the subsequent loss of growth in China (and Russia) are causing authoritarians to find external threats to stay in power.

This will not play out quickly. There are worries but we should consider China (and India, and Africa) as sources of non-consumption that can and will be addressed with production. So the worry here is again structural and slow-burning. I would argue decades in the making.

Not much has been said about the benefit to Apple of its China strategy. Many assume that lower costs and access to a large market are all that has been gained. But it’s much more complex than that. The access was not to a lower cost base but also a much more agile and flexible production infrastructure. The flexibility allows for a very tightly coupled value chain. The result is a reduction in inventory and a rapid time-to-market which is essential to Apple’s integrated product/software/service rhythm of yearly launches.

I’d argue that without the flexible, at-scale production system China allowed Apple would not have been able to succeed at reaching a billion highly satisfied users. The world would have been awash with cheap Android phones and very few iPhones, a repeat of the PC model where hardware was largely irrelevant.

The challenge of the future is to take this model globally and either transplant it to India and other places or to scale it in such a way that it can be distributed to many centers of production. Toyota famously not only created a product system that reduced cycle time and inventory but did it with 400 plants globally. I certainly hope that the Apple Production System will also be celebrated one day as the “machine that changed the world”.

Come learn more about the Apple Production System at the ACTIVE conference.

In my last post I asked if tariffs, antitrust remedies, distribution dissatisfaction and non-iOS competition make any impact on how customers perceive the company. Let’s begin with tariffs.

Broadly, tariffs are unpredictable and politically arbitrary. The greatest harm may come not from the misallocation of capital among nations but from the inability to plan and thus the non-allocation of capital altogether. A cessation of investment is a recipe for stagnation if not poverty but it’s not a management challenge. In most situations it behooves every manager to do nothing. Therefore it’s no more interesting to devise a strategy for tariffs as it would be to devise a strategy for volcanic activity. 

But still, how does it affect the relationship with the customer? One could argue that tariff-induced price increases might cause a decline in demand but there are always going to be alternatives for consumers. Let’s not forget that tariffs are being offered as punishment for US customers only and the US is less than 40% of Apple’s business (“Americas” is about 42% and that includes Canada, Mexico, Central- and South-America.) The rest of the world has already been punished to varying degrees with higher prices due to customs fees, value added and other taxes. This is why there was a thriving smuggling pipeline from the US to rest-of-world for as long as Apple has been in business. 

The smuggling of products across borders without payment of taxes on trade is called the grey market and is neither new nor small.  The grey market for electronics is estimated to range from 6% to 8% of the global market, worth up to $60 billion. Some studies suggest that 13% of global consumer sales involve products sold outside the manufacturer's intended market with the electronics segment above 14%. The share of Apple sales generated through grey channels may be somewhere in the upper part of that range.

Even 10% of Apple sales being grey market could come as a shock to many but it shouldn’t. Many Americans may be unaware of this because the US has been the source of grey exports with couriers smuggling products from there to almost every other location on earth. This is mainly because the US is among the least taxed consumer products markets.   

Perhaps the pipeline will soon reverse direction. 

American couriers queuing in foreign Apple Stores hoping to bring home some “duty free” iPhones or doing it for friends, family or for a fee is certainly foreseeable. Prohibition era alcohol smuggling was a vast industry for the US, mainly from the Caribbean and Canada. Drug smuggling has been a vast industry since then. Consuming contraband is therefore not beneath US consumer dignity. Organizing this on a large scale enables criminal gang formation and it might appear harmful for a brand to be associated with such activity. But again, reflecting on this historically, it does not normally detract from the brand that it is the subject of smuggling. Marlboro, Dewars and other toxins retained their cachet throughout their smuggling to and from various markets. Firearms, tobacco and alcohol are as desirable now as they were when constrained to the point of exclusion.

When I was young it was common to see Levi’s jeans and boxes of American cigarettes being used as currency behind the Iron Curtain and nobody would argue that those brands suffered as a result.

Today, even with higher prices, satisfaction among non-Americans is not worse than with Americans, taxes and governmental pilfering notwithstanding. In other words, prohibitionism does not work in eliminating demand or brand value. Tariffs are a mild form of prohibition and therefore their value impact is quite limited.

It’s not unusual to see articles consisting of lists of reasons why Apple is facing an existential crisis. Agonizing and hand-wringing about Apple been a meme for decades, so much so that it had its own web site, The Apple Death Knell counter and the "Pray" for Apple imagery was a thing since the 90s. The original article from June 1997 offered 101 tips on saving the company starting with outsourcing hardware or scrapping it entirely.

Image (media.wired.com)

Although the imminence of death has always been persistent, what’s changed over the years were the causes. There are far too many to recall or enumerate but I have through personal recollection and pattern recognition grouped them roughly into three categories:

1. Irrelevance due to low market share, i.e. insufficient network effects for its platforms which will eventually drive users away. This is fundamentally a size problem.
2. Insufficiency in capital/resources/talent/management. This includes the death of Steve Jobs, the departure of various other managers and historically the low spending on R&D. This is more qualitative but still fundamentally a problem of being too weak.
3. Externalities including but not limited to: law suits, regulations, taxes, technology standards. This includes everything from the absence of the Beatles in the iTunes store to confiscation of assets or extortion by governments. Extreme versions are antitrust cases alleging monopoly status. This is a problem of being too big or too strong. (Contrast with the first two categories)

For instance, during the last Apple Investor Event, I highlighted a typical article citing a list of problems for Apple. It was Titled “5 problems facing Apple it won’t talk about at is April event”. Published in August 2024 it cited the following:

1. Maintaining profitability. Citing a drop in operating margins in 2020(!) the problem was stated as a need to maintain momentum.
2. Antitrust regulation. Citing EU and US investigations against Apple and other Big Tech companies. Money quote: “reports have surfaced that several tech companies in China are actively testing ways to circumvent Apple’s new privacy update”).
3. Lawsuits in general, Epic trial in particular.
4. A lack of diversity in the management team. Essentially, insufficient DEI.
5. Competition. Google, Blackberry, Dell, Fujitsu, Microsoft and Samsung are cited.

When I read this I thought it must have been AI generated (hallucinated more likely). The dates did not make sense (August publication predicting an April event) and the competition cited was obsolete (Blackberry? Fujitsu?). It was a random list of Apple news framed as problems. Rather than try to refute them, I realized that it did not matter. The objective of the author was not to illuminate but to discharge something, anything, as long as it was negative.

Since last August a lot has happened. A new US administration, a new set of problems. Judging by the share price and news flow, Apple bashing is once again in vogue. (Incidentally, the stock price reached an all-time-high in December 2024 at nearly $260/share, a substantial increase from $170 or so six months earlier.) Today everyone and their editor is jumping into the scrum writing lists of Apple problems.

The pattern however seems a bit different this time. Almost all the catastrophes Apple has are externalities. Let’s try to enumerate them (inspired by Bloomberg.)

1. Tariffs. Consequences include presumably negative impact to company’s operations, product development and device prices.
2. Antitrust. A US Department of Justice lawsuit for allegedly anticompetitive practices. Similar actions by the European Union, South Korea, Japan, India, etc.
3. Lawsuits. Apple must stop taking a commission on in-app purchases and subscriptions paid via the web. Epic again.
4. Distribution deals (Google antitrust). The threat of losing a $20 billion-a-year deal with Google for default search placement.
5. AI delays: the risk of falling even further behind its tech peers
6. Competition in China.

What these examples seem to share is that, except for the AI execution, they are externalities and thus of the third category. They are therefore problems related to being too successful.

Tariffs are a problem because Apple relies on massive scale and thus requires integrated production which creates concentration in production centers which are difficult to redeploy. Antitrust is a problem because Apple is too big and thus dominates developer distribution. Lawsuits center on having too much control—related to antitrust. Google antitrust remedy forces a decline in distribution revenue for browser search—a predicament coming about Apple’s enormous leverage vis-a-vis Google. Being so big means there is only one way to go: down, hence Chinese competitors gaining share. Lastly, AI execution problem is more Category 2 problem but would not be an issue if Apple did not insist on Privacy for its customers, something which caused much of its success with customers that it got too big.

Incidentally, profitability is now higher than ever, top line growth is consistent, bottom-line growth is even faster, the company is guiding growth in-line with current trajectory, the number of customers is at a new record, churn into the platforms continues, Apple is winning against non-consumption, capital is pouring into shareholder pockets and R&D spending is soaring. Cue the charts.

What the casual observer might note missing from the Doomed listicles is any mention of customer satisfaction, loyalty, acquisition and retention. The things the company actually talks about on earnings conference calls.

Do these externalities of tariffs, antitrust remedies, distribution dissatisfaction and non-iOS competition make any impact on how customers perceive the company?

We'll discuss this in the next few posts, as the lead up to presentations at ACTIVE: The Apple Investor Conference on Tuesday June 10th, the day after the WWDC25 keynote.