Apple cut costs for iPhone 11, savings not expected to be passed on to consumers

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Company will reportedly retain savings from reducing costs to cushion the blow of expected tariffs to be levied on Chinese electronics.

Apple has reportedly managed to reduce the cost of production for its upcoming iPhone 11, according to a report by JP Morgan which was picked up by AppleInsider.

The reports states that Apple has managed to cut the cost of production the iPhone 11 when compared with the previous iPhone XS by up to 12 per cent, adding that users are unlikely to benefit from this.

According to JP Morgan’s report, the bill of materials for the iPhone 11 has been chopped by $30-$50 (€27-€45). The report chalks the savings down to a reduction in memory prices, adding that the annexation of an iPhone XS feature will surely help keep iPhone 11 prices down.

As for why the savings are not expected to be passed on to the consumer, JP Morgan concludes that the reason is political. Apple reportedly seeks to use the reduced cost to absorb the threat of 10 per cent tariffs being placed on Chinese electronics. A significant majority of iPhones are produced in China, while President Trump has recently urged American companies to bring their factories home.

JP Morgan goes on to note that two-thirds of iPhones are sold outside the US, with no price cuts planned, meaning Apple will certainly benefits from the overall reduction in the cost of production.

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