The news comes following Donald Trump's victory in the presidential election. The Republican president-elect has been vocal about how U.S. companies should be building their products in America.
"We're going to get Apple to build their damn computers and things in this country instead of in other countries," Trump said in a speech in January.
He also said that he would slap a 45 percent import tariff on Chinese goods. Beijing hit back however. In an opinion piece published in a state-backed newspaper, the Chinese government warned that iPhone sales and other American goods could suffer if such a plan were to go through.
"A batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the U.S.," the Global Times article read.
Manufacturing the iPhones abroad allows Apple to maintain a strong margin on its product.
Apple is Foxconn's biggest customer but Chairman Terry Gou is worried about the rising production costs of such a move, the Nikkei reported, citing a source saying that costs will double. It's important to note that the discussions began in June, five months before Trump won the election.
Analysts said it is still hard to quantify what such a move would mean for Apple's finances, but warned that there will be an impact.
"If the world moves to a more nationalistic approach 'made in America, by Americans, for Americans' or 'made in China, by Chinese, for Chinese'? The unwind of these variable conditions will likely impact margins, growth and suppliers exposed to the globalization trend of the last decade. The same will likely make global tech a tougher place to invest in 2017," Neil Campling, head of global technology, media, and telecoms research at Northern Trust Capital Markets, said in a note on Friday.
Read the full Nikkei Asian Review report here.
