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Is Apple Jacking Up Prices?

Apple’s move to address working conditions at its supply chain factories in China, particularly those of the Foxconn group, may ultimately result in consumers having to pay more for Apple products like the iPhone.

Hot Feature: Will Central Banks Drive Apple Shares to $1,000?

According to Alberto Moel, an analyst at Sanford Bernstein, workplace improvements that may be suggested by the audit of the independent Fair Labor Association would raise costs for Apple. Moel predicts that the changes could raise the retail price of a handset by almost $10.

In this respect, Apple enjoys marketing muscle that allows it to easily pass on such costs to the end consumer, a luxury not available to other handset manufacturers.

Apple’s chief contract manufacturer, the Hon Hai Precision Industry Co, which trades as Foxconn, is already taking steps to shift production to lower cost regions in China such as Chengdu and Zhengzhou by June. In addition, Foxconn may also insist on better productivity from its workers to keep costs down.

“Hon Hai has to either pass on those higher [labor] costs to its customers such as Apple, or work on its productivity. It looks like it will do a mix of both,” Moel said.

Read more insightful stories at Wall St. Cheat Sheet:

Facebook Bulks Up.
Does Yelp’s Debut Mark Turning Point in Tech?
Consumers Are Casualties of E-Book Standoff.

To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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