Technologies

Apple Is Moving US iPhone Assembly to India Amid Tariff Turmoil

Apple CEO Tim Cook also said Vietnam will manufacture almost all iPad, Mac, Apple Watch and AirPods products sold in the US.

Apple will be sourcing almost its entire line of iPhones sold in the US — about 60 million phones a year — from assembly facilities in India, CEO Tim Cook said Thursday. The planned move comes against the backdrop of the Trump administration imposing tariffs against China of up to 145%.

The tech giant is predicting a $900 million impact to Apple’s costs this coming quarter if tariff policies, rates and applications stay as they are right now.

«For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin,» Cook said during Apple’s Q1 earnings call on May 1, «and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch and AirPods products sold in the US.»

It comes as some products such as mobile phones and computers have been exempted from those tariffs for the time being. Apple has long centered its iPhone production in China, making it vulnerable to any trade war between the two countries and spurring speculation that tariffs could mean price increases for the company’s biggest-selling product.

By moving third-party assembly of US iPhones to India, Apple could avoid the most significant cost pressure of a trade war, though India itself faces new tariffs as well.

The company had already begun shipping iPhones made in India, adding to its product reserves, before new tariffs became active.

A global perspective on iPhones and tariffs

While it’s unclear how long the trade war with China will continue, Apple’s shift is part of a larger strategy that may include more US component manufacturing, says Angelo Zino, a senior vice president at CFRA Research.

«Apple must think long term with manufacturing capacity,» Zino said. «We think Apple will look to double its India iPhone capacity in the next two to three years to help mitigate future China-US tensions.»

That said, Zino expects Apple to keep a large China presence, as 15% of its sales will be in that country and global capacity of iPhone manufacturing will still rely on Chinese manufacturing. Cook confirmed that China will «continue to be the country of origin for the vast majority of total product sales outside the US.»

While Apple wouldn’t shift iPhone production entirely to the US, which would be cost-prohibitive, Zino said, it could potentially ramp up modem and internally designed processors with Taiwan Semiconductor in the US.

«That is clearly where the value of Apple lies for the Trump administration, in our view, rather than assembling its devices,» Zino said.

Will Apple’s manufacturing shift to India last?

Muzammil Hassan, head of patent portfolio management and monetization in India for Quandary Peak Research, noted that Apple’s shift to more manufacturing in India was already happening before tariffs were enacted.

«I don’t think it’s a temporary move,» Hassan said. «Foxconn has been training thousands of employees in their factories in Tamil Nadu. In fact, there were reports that iPhone 17 might be developed and manufactured exclusively in India.»

While shifting all US iPhone production to India may be bold, Hassan said, Apple is not pioneering with its manufacturing strategy. «I’d say Apple is late to the party. Samsung, Oppo, Vivo and Motorola among others were already manufacturing their phones in India.»

In addition, Google may be migrating production of its Pixel phone to India from Vietnam, he said.

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know