John Ternus faces critical decisions on iPhone pricing and US manufacturing – FT
Source: 9to5Mac
Incoming Apple CEO John Ternus will face two critical decisions soon after taking the helm, according to a new Financial Times report.
- How to respond to a massive increase in memory prices, with Apple’s RAM costs projected to rise by more than 400 % by next year.
- How to shape the company’s manufacturing plans across China, India, and the United States.
Memory costs to rise more than 400 %
Apple is entering an entirely new world when it comes to buying memory for its devices. Historically, the company has been such a dominant player that it could dictate terms to suppliers. With memory in massive demand for AI servers, that leverage is fading.
The Financial Times notes that memory has until recently represented around 10 % of an iPhone’s material cost, a figure expected to climb to as much as 45 % by next year. This forces Ternus to decide whether Apple should:
- Absorb the cost increase, reducing margins, or
- Raise prices, risking a decline in sales.
Analysts are expected to press this issue during tomorrow’s earnings call.
Manufacturing across China, India, and the US
Another pivotal question is how Apple will reshape its manufacturing footprint across these three regions.
- China: Apple has historically navigated a delicate balance, especially after Tim Cook convinced the Trump administration that U.S. iPhone manufacturing was unrealistic, while still delivering other U.S. manufacturing investments.
- India: The shift of iPhone assembly from China to India has drawn aggressive responses from the Chinese government. A February report detailed three ways China is deliberately hampering iPhone production in India.
- United States: Ongoing pressure to increase domestic investment.
The report indicates that Ternus will need to make long‑term supply‑chain decisions that could affect the company for years.
“US investment will be one of the critical drivers of Apple’s strategy over the coming years,” said Samik Chatterjee at JPMorgan. “For John Ternus, the question is: how do I position the company to be on the right side of both Washington and Beijing?”
9to5Mac’s Take
Tim Cook appears to have volunteered for the role of political fall guy, transitioning from CEO to Executive Chairman. It is likely Cook, rather than Ternus, will continue delicate negotiations with both U.S. and Chinese administrations.
By shouldering diplomatic pressures, Cook can free Ternus to focus more on Apple’s products. The upcoming analyst questioning will be telling:
- Slashing margins may upset investors.
- Raising prices could alienate customers.
How Apple balances these competing forces will shape its strategy in the years ahead.