The iPhone 16e is priced at $600, marking a 40% increase from the $430 iPhone SE, which indicates rising costs for upcoming models such as the iPhone 17. The United States is urging Japan and the Netherlands to tighten regulations on chip exports, specifically targeting Chinese companies like SMIC and Huawei.
Trump is building on the policies established during Biden’s administration, with the goal of curbing China’s advancement in AI and military technology by imposing restrictions on chip tools and maintenance.
In 2023, Huawei’s Mate 60 Pro managed to circumvent sanctions by utilizing 7nm chips produced by SMIC, leading to US frustration over loopholes in export controls.
The rising price of the iPhone 17 and the US-China semiconductor war
As Apple prepares for the launch of its iPhone 17 in 2025, analysts are cautioning about significant price increases linked to rising tensions between the US and China over semiconductors. The iPhone 16e, which debuted at $600—an increase from the $430 iPhone SE—suggests a larger trend.
This change is rooted in a geopolitical crisis: the US is mobilizing allies such as Japan and the Netherlands to undermine China’s chip industry, with the goal of hindering its advancements in artificial intelligence and military capabilities.
Trump doubles down on Biden’s chip push
The Biden administration imposed restrictions on the export of advanced chip-manufacturing equipment to China, preventing companies such as SMIC (Semiconductor Manufacturing International Corp.) from obtaining US technology.
Now, officials from the Trump administration are advocating for even stricter measures, urging Tokyo Electron and ASML to cease equipment maintenance in China.
This bipartisan effort aims to target Huawei, SMIC’s leading client, which surprised the US in 2023 by introducing the 5G-capable Mate 60 Pro, equipped with SMIC-manufactured 7nm chips—a development considered unachievable under the existing sanctions.
Why Huawei’s survival worries Washington
Huawei’s addition to the US Entity List in 2019 prevented it from obtaining American technology without authorization. However, its collaboration with SMIC enabled the company to circumvent these restrictions by utilizing domestically produced chips.
The success of the Mate 60 Pro revealed weaknesses in US export controls, leading to demands for stricter regulations. Officials are concerned that unregulated advancements in Chinese chip technology could strengthen military AI systems, a risk that both administrations now consider a top priority.
Global chain reaction: From iPhone to supply chain
Apple’s dependence on international manufacturing exposes it to risks from tariff disputes and chip shortages. As SMIC and Huawei dominate segments of the supply chain, US restrictions could increase production costs, ultimately affecting consumers with higher prices for iPhones and tablets.
At the same time, ASML and Tokyo Electron are likely to experience revenue declines as China’s $150 billion chip industry looks for alternative solutions.
The final price of the iPhone 17 will depend on how China responds to US sanctions. If SMIC succeeds in producing 5nm chips, which is rumored to be a goal for 2025, Apple could encounter higher component costs. At present, the tech Cold War is showing no signs of easing, leaving consumers and businesses caught in the middle.
