Apple believes the USA’s new tariffs policy will impact its finances by at least $900 million in its next quarter, has re-organized its supply chains to protect itself from whatever comes next, but can’t predict the impact on its business.
That’s the news from the iGiant’s Q2 2025 earnings report, which saw CEO Tim Cook reveal $95.4 billion of quarterly revenue, a five percent year over year jump diluted earnings-per-share rising eight points to $1.65. Net income rose five percent to $24. 8 billion.
On the company’s earnings call, Cook swung straight from discussing revenue and earnings to Cupertino’s plans to manufacture in the USA.
“During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year,” he said. “We also source glass used in iPhone from an American company. All told, we have more than 9,000 suppliers in The US across all 50 states.”
The Trump administration has called for Apple to manufacture more of its products in the USA, with Commerce Secretary Howard Lutnick this week saying Tim Cook wants to manufacture iPhones in America.
I wouldn’t want to predict the mix of production in the future
Cook didn’t offer any news on that front. He instead reported that “almost all iPad, Mac, Apple Watch, and AirPods products” sold in the USA are now made in either India or Vietnam, countries that America tariffs more lightly that China. Hardware produced in the Middle Kingdom will be sold to markets other than the US.
Asked to enumerate the impact of US policies on Apple, Cook offered the $900 million prediction for Q3, but then said “I wouldn’t want to predict the mix of production in the future.”
Later in the call he was asked to provide further details and responded “I don’t want to predict the future because I’m not sure what will happen with the tariffs. And it’s very difficult to predict beyond June.”
That’s a reference to the USA’s current pause of “reciprocal tariffs” that will end in early July. India and Vietnam have both engaged with the Trump administration to discuss trade.
Another regulation that’s impacted Apple is Europe’s Digital Markets Act, which requires the company to allow third party app stores to sling code for its products. Asked if developers have changed behaviour and if that’s impacted Apple, Cook offered a cryptic response that any change is “embedded in the actuals” and “there may be more to come and so forth.”
We think that means Apple has seen a change in app store revenue in Europe.
Apple AI is OK
Apple’s AI offerings arrived late and aren’t as obviously impactful as generative AI services, which has led some to wonder if the iGiant is missing the boom.
Cook told investors the iPhone 16 has done better in countries where the Apple Intelligence AI service is available, suggesting it drives purchases.
He also pointed to revenue from iPad sales growing 15 percent, and Mac sales rising seven percent to $7.9 billion for the quarter.
Cook also touched on Apple’s plans to make its own modems, the first of which recently debuted, and plans to make more of its own silicon.
“We love that we can produce better products from a point of view of really focusing on battery life and other things that customers want,” he said. “And so we have started on a journey, is the way I would put it,” he said.
Cook also used the call to offer a little more detail on the company’s previous announcement of plans to invest $500 billion in the USA. He said plans to build servers in Texas will be done with a manufacturing partner, and that the $500 billion figure covers capital and operational expenditure.
It also covers spend on datacenters, which Cook confirmed will see Apple build some facilities of its own and rent space in others. The company plans a similar strategy for foundation AI models, some of which it will create while looking to partner for others.
Asked about Apple’s progress in China – the source of 17 percent of Apple revenue Cook offered “positive nuggets” in the form of news that the iPhone and iPad are in the top two models bought in urban China, while the Mac, the iPad and the Watch “are attracting a majority of customers new to that product.”
Investors weren’t thrilled by these results as Apple’s share price fell four percent in after-hours trading. ®
