“What the latest analysis shows is that the smallest part of Apple’s costs are here in Shenzhen, where assembly-line workers snap together things like microchips from Germany and Korea, American-made chips that pull in Wi-Fi or cellphone signals, a touch-screen module from Taiwan and more than 100 other components,” Barboza reports.
“But what it does not reveal is that manufacturing in China is about to get far more expensive,” Barboza reports. “Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones.”
Full article here.
Cool, move the jobs back stateside, Lots of cheap labor and rent here.
Just me: “Cool, move the jobs back stateside, Lots of cheap labor and rent here.” Indeed, I expect there’s some former Dell property they can have for a song. Even if Apple is out of the manufacturing business, it can nudge its contract manufacturers in that direction.
I’ve long argued that Apple’s reliance on China to manufacture just about everything is risky. Strikes, currency changes, problems at the ports, etc. could all put its supply chain at risk. And given how much automation is involved in producing Apple kit, why is China the default manufacturing center?
I always thought Apple and other computer companies should have some assembly jobs state side, sure or labour costs more but wouldn’t that be offset by not having all that shipping cost to china and back?
HP and Dell are at a greater risk than Apple since they have slimmer margins and more parts/processes. Apple also dives deep into the manufacturing process of their products and has their own team that works with contract manufacturers to improve the process. They can match any company on efficiency metrics. I would also bet that they have hedged the financial impact similar to how Southwest Airlines was getting oil on the cheap during the oil crisis.
Finally, the majority of Apple iPhone sales are international. Hate to say it but the consumer market in the US is no longer as important as it used to be.
It pays to be an “affordable luxury” goods company. Market share and revenue are no longer the key metrics for healthy companies.
Manufacturing has moved from Malaysia to Singapore to Thailand to Vietnam to China. Which continent do companies go to next? Africa, or the subcontinent? Can’t go to insurgent risk countries.
@ Shawn
We all would like assembly jobs for US workers, but when you consider the overall costs, to produce the product in the US would cost much more. American union labor would cost up to 20 times as much, when you consider the wages, benefits, having to abide by perpetual union work-rules, and union strategies to strike and threaten bankruptcy and causing losses to American business when times are good. Then American union attitudes of “hate the employer” would ruin Apple’s quality control and reputation.
No tech company that is consumer and quality oriented…not Microsoft, Dell, HP, Intel (or anyone else) …can any longer use US union labor and be competitive. Those jobs are gone forever.
But don’t worry. Apple, mindful of past problems with hardware, standards and labor “lock-ins”, is already planning alternatives to dependency on particular chips, and assembly.
@Justme. I doubt if you’ll get US workers to slave for $2 an hour. I have problems hiring people at $10 per hr. Then there are millions on the dole who can afford cars, tv’s cell-phones etc. China will be in business for a long time.
Unless, of course, if the Big ‘0’ gets his way, we’ll all be doing more for less. Maybe even all wearing the same clothes.