'Strong Earnings' Apple Expects $900 Million Cost Increase Due to Tariffs

iPhone Sales Surpass Expectations, but Shares Drop 3% After Hours
"Apple to Source Over 19 Billion Chips in the U.S. for Its Devices"

Despite concerns over tariff measures, Apple posted results that exceeded market expectations. However, due to the tariff policies of the Donald Trump administration, the company expects an additional cost of $900 million (approximately 1.3 trillion won) this quarter, casting uncertainty over whether it can maintain its strong performance going forward. Apple also announced that most Apple products sold in the United States will be manufactured in India and Vietnam, and that it plans to purchase 19 billion chips in the U.S. this year.

EPA Yonhap News

On May 1 (local time), Apple reported its fiscal second quarter (January to March) results, with revenue of $95.36 billion (about 137 trillion won) and earnings per share of $1.65 (about 2,371 won). Both figures surpassed the Wall Street consensus compiled by market research firm LSEG, which had forecast $94.66 billion in revenue and $1.63 in earnings per share. Notably, iPhone sales, which account for about half of total revenue, reached $46.84 billion, exceeding the $45.84 billion estimate by market research firm StreetAccount.

Mac and iPad sales also outperformed expectations, recording $7.95 billion and $6.4 billion, respectively. However, revenue from services, a segment that has recently grown in importance and includes Apple Music and Apple TV Plus, was $26.65 billion, falling short of the $26.7 billion estimate.

Except for the slight underperformance in the services segment, Apple delivered generally solid results. However, after CEO Tim Cook projected that costs could rise by $900 million due to the impact of tariffs, Apple's stock, which had closed slightly higher for the day, fell by more than 3% in after-hours trading.

CEO Cook also mentioned that Apple will source tens of millions of processors from TSMC foundries in the U.S. this year, stating, "We plan to procure more than 19 billion chips in the United States for future Apple devices." This is seen as Apple responding to President Donald Trump's emphasis on domestic manufacturing.

He further confirmed a strategy to diversify Apple's supply chain in response to the Trump administration's tariff policies, stating that most iPhones sold in the U.S. during this quarter will be produced in India.

Apple did not provide guidance for the upcoming quarter. Wall Street expects Apple to report $89.45 billion in revenue and $1.48 in earnings per share for the April to June period.

Meanwhile, some are raising concerns that Apple's App Store-based revenue model could be impacted after the U.S. District Court for the Northern District of California ruled on April 30 that Apple failed to comply with an injunction in the antitrust lawsuit filed by Fortnite developer Epic Games.