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• 00:00All right. Wait. Could it possibly be that Apple’s long anticipated overhaul of the iPhone could be really, really here and very soon? Writing about it in his weekend newsletter, Power on Weekend Newsletter, and talking about how this could be one of the most pivotal years for Apple is Bloomberg News chief technology correspondent Mark Gurman. He’s out there in L.A.. Mark, good to be here with you. We all got your newsletter over the weekend. Why is this going to be potentially a really big year for Apple? You know, the backdrop is fairly interesting, right? You have iPhone sales overall. Apple sales are down over 10% in China. Right. One of their most important markets, they’re way behind in artificial intelligence with Apple intelligence and AI compared to competitors like Lama from Medha Chatterjee from Open Air and of course, Germany and how deeply integrated it is into Samsung devices. Right. You have their form factor being behind the times at this point. Right. They’ve used the same design for five, six years now. Right. So you see from a technology standpoint, they’re a little bit behind the competition from both design and I from a sales standpoint, they’re lagging a bit from where Wall Street had anticipated there would be. So, you know, there’s a little bit more to be desired from investors at this point. From customers. Right, From technologists. And so this is a very pivotal year this year where Apple needs to show that from a technology perspective, it’s able to compete with the best of them. From an AI perspective, it’s able to compete with the best of them, but they also need to compete at the lower end of the market. And that’s why the iPhone SE is so important. The iPhone I see today. Right. This won’t be the case on Wednesday, but the iPhone SE today uses a home button. Right. That’s the original interface mechanism they introduced at the iPhone 27 in 2017, nearly a decade ago. They got rid of it with the iPhone ten, but it still hangs around in the lower end model. So they’re going to replace that version as soon as Wednesday with the new iPhone XR that has an all screen design face I.D. and removes the home button. So a lot of consumers are looking forward to that, especially because I believe the price point will be around $500, making it a really solid entry into the mid-tier, the market competing with some of the Chinese phone makers. Right. We’ll see what the China price equivalent is along with offerings from Samsung. And Google has their new pixel nine coming out soon as well, too. Mark, what could the redesign of the chassis tell us about what a completely redesigned iPhone looks like for announcement in September as it typically is going to tell us? Nothing, actually, because this new iPhone SE is going to use the same design as the iPhone 14 from a few years ago, including a notch not the dynamic elan that we’ve seen on the newer profile. And so it’s going to be a bit of a legacy design come the end of this year. But a few things happening. You’re going to have an updated design on the 1717 pros, but the big change will be a new thinner phone that I’m calling the 17 air. It’s going to be about two millimeters thinner than the current iPhone pro line. And when you’re talking about millimeters at these exact sizes already, that’s a big difference, right? We’re talking maybe 20 to 30% thinner than the iPhones people are using today. But of course, that’s going to come with some drawbacks. There’s not going to be an esim or it’s going to be used some only there’s going to be no physical SIM card slot, which is a minor inconvenience for some people in the U.S. But internationally, it’s a big deal because in China, even though China is so advanced from multiple standpoints in terms of smartphones and modern technology, they’re actually pretty heavily reliant on physical SIM cards rather than digital SIM cards. So we’ll see what happens for that phone in China. The other thing to note is that the new iPhone SE is coming this week and the iPhone 17 air and September are both going to use a non Qualcomm modem, an Apple in-house modem for the first time. So we’ll see performance wise how that stacks up against the Qualcomm modems that consumers are used to. If all goes to plan, customers will never know the difference. What? Carol, speechless because she wants a folding phone. Well, that’s what I was thinking. She wanted to hold a story. What can I say, Marc? She wants a folding iPhone is going to happen. That never going to happen. I would anticipate some sort of foldable iPhone coming next year. I anticipate them eventually turning it into a stand alone line like Samsung has done. I actually had the chance about a week or week and a half ago or so to try a trifold phone. So it’s not one fold, it’s two folds. And instead of folding out to the size of like a small tablet, it falls out to the size of a full screen, a large tablet. And it’s a pretty remarkable piece of technology. Very expensive. Right? I saw on eBay there were like a few thousand dollars, maybe up to $5,000 in Portland from China. Weiwei has won show me has won. A few other players have won. But I think Tri folds or something that Apple should give a shot at. But it’ll probably be five years before they do anything remarkable with it. Hey, Marc, before we move on, I mean, does Apple have to be worried about these tariffs that are being levied by the United States against China? Issue with the tariffs is that. Well, Apple has made price adjustments due to currency fluctuations. You’ve seen this happen in Turkey, in Russia, in other places, internationally, There’s a lot of risk doing so in the United States given the heightened competition and the phone prices are already so premium right north of $1,000 for most iPhone models at this point. So I definitely would anticipate some moves needing to be made, but I’m leaning towards the company eating some of those costs. If Cook is not able to get some sort of reprieve from Trump. Was he able he was able to get a reprieve in the first Trump administration? Remind us he was able to get a reprieve in the first Trump administration. The iPhone didn’t end up getting tariff to any substantial degree, obviously importing from China. There is a, you know, a few percentage point tariff already, but we’re talking about Trump stacking up an additional 10% in back in the first Trump admin. I mean, there were talks between 15 and 25% for tariffs, even more. Right. And so this is going to be an interesting thing to watch to see how this is going to impact Apple. Of course, they’re not going to let it impact their their revenue, which is what Wall Street watches, you know, mostly. But there is the anticipation that it could impact gross margins and net income and profit down the road. They don’t anticipate that happening in the current quarter because their guidance on margin has been pretty pretty much the same as it always is, somewhere between 45 and 47% margin, a little bit of a cash cushion right now on their balance sheet. They can help them out with that. That’s a good point. Mark, how much have they diversified the supply chain outside of China? What has Foxconn done in India, for example? Anything meaningful in recent years? They’ve diversified in meaningful ways, but I would say in immaterial ways. So a lot of the diversification so far has been on the lower end iPhones. They’re starting to do some of the pro phones in India as well. But production of the iPhone, I would still say is 90% plus occurring in China for for so many reasons. They’re used to making them there. The precision, the employee culture there. Right, Max, is where we’ve seen a lot outside of China recently. You’re seeing Malaysia, you’re seeing Thailand, seeing Vietnam for the AirPods as well. I anticipate some more iPad production outside of China in the coming quarters. So meaningful. But in materials, what I would say.