The back of the iPhone (and indeed most Apple products) displays this legend: “Designed by Apple in California. Assembled in China.” Those assembled phones are then shipped out of China to markets around the world. So, how big is the impact of iPhones on China’s exports? Big enough to add 1% to exports in the third quarter of this year, reckon analysts at Bank of America-Merrill Lynch (BAML) in a research note.
BAML’s analysts made a bunch of assumptions to arrive at the 1% figure.
Of the estimated 100 million iPhones China will produce this year, some 17 million will be sold in China. The rest count as exports, which at an average of just over $300 per unit, add up to a hefty $25.2 billion worth of exports. Considering China’s exports in the second quarter of this year grew by 4.9%, an added percentage point is no small matter, argue the BAML analysts. (It’s worth remembering here that the profit from assembling the iPhone 5S was roughly $8 per unit.)
The economic impact of the new iPhone will be even greater on Taiwan, which has a much smaller economy but makes the chip in the device, which alone will add 2% to Taiwan’s exports in the third quarter, and another 1% in the fourth. And Taiwan’s GDP will see an iPhone-related jump of 0.40% this year, a welcome addition to BAML’s estimated 3.4% growth for the country in 2014.