Nikkei recently reported that Apple has approached two iPhone manufacturers Foxconn and Pegatron to investigate moving iPhone production to the U.S.,” Robert Castellano writes for Seeking Alpha. “This would be an alternative to get around a possible 45% tariff for Chinese goods imported into the U.S. in an effort by President-Elect Donald Trump to bring back manufacturing jobs.”

“There is a misconception that the reason most electronic devices are manufactured in China is because of low labor costs. That used to be the case but is no longer true, as China and other low-manufacturing-cost countries experienced a significant increase in relative manufacturing costs since 2004,” Castellano writes. “Now it is a matter of established infrastructure (initiated in the early days of contract manufacturing in China) and logistics.”

“A Boston Consulting Group study shows that China is virtually even with the U.S. when the most important economic factors are considered – total labor costs, energy expenses, productivity growth, and currency exchange rates,” Castellano writes. “Apple doesn’t have to move total iPhone production to the U.S., just for the 20 or so percent purchased in the U.S. and under the jurisdiction of the U.S. government. But any additional costs to manufacture in the U.S. would be spread out over the entire 100% of iPhone sales.”

Read more in the full article here.

MacDailyNews Take: Last week, The Wall Street Journal reported:

If Apple finds enough workers to assemble in the U.S., the cost of making an Apple iPhone 7 could increase $30 to $40, estimates Jason Dedrick, a professor at the School of Information Studies at Syracuse University. Since labor accounts for only a small part of an electronic device’s overall costs, most of these higher expenses would come from shipping parts to the U.S.


If the iPhone components were also made in the U.S., the device’s costs could climb up to $90, according to Mr. Dedrick’s research with UC Berkeley’s Greg Linden and UC Irvine’s Ken Kraemer. That means that, if Apple chose to pass along all these costs to consumers, the device’s retail price could climb about 14%.

As Castellano writes above, “any additional costs to manufacture in the U.S. would be spread out over the entire 100% of iPhone sales.”

SEE ALSO:
President-elect Trump tells Apple CEO Tim Cook that he’d like to see Apple make products in the U.S. – November 23, 2016
Could President Trump be the catalyst for an all-American iPhone? – November 18, 2016
Apple could make iPhones in the U.S.A. under President Trump, sources say – November 17, 2016
President Trump’s Made-in-America hurdle: Asia – November 16, 2016
Apple assembler Foxconn now has 40,000 ‘Foxbot’ robots working at factories in China – October 5, 2016
Apple supplier Foxconn replaces 60,000 factory workers with robots – May 25, 2016
Foxconn robots better, but still not precise enough to assemble Apple iPhones – December 5, 2014
Foxconn CEO disappointed with current-gen iPhone-assembling robots; next-gen ‘Foxbots’ in the works – September 22, 2014
Foxconn to deploy ‘Foxbot’ robots for iPhone assembly – July 7, 2014
Why Foxconn’s iPhone robots could create American jobs – February 2, 2014
Apple dives deeper into designing and inventing robots, other manufacturing tech – November 22, 2013
Robots made Apple switch to ‘Made in the U.S.A.’ Macs – December 11, 2012
Foxconn’s 2012 plan: More robots, no layoffs, zero suicides, new factories – November 22, 2011
Foxconn to replace some workers with 1 million robots within 3 years – July 31, 2011