Apple iPhone production in the U.S.is actually straightforward and not expensive

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

49 Comments

  1. If so:

    How would that impact sales in China?

    Would Chinese shoppers stop buying a foreign designed & made brand?

    Would the Chinese government encourage alternatives?

    Would having an oompa loompa for a laughing stock president help?

    Enquiring minds want to know.

    1. The author of the article is saying only the phones sold in the U.S. would be made in the U.S. This is around 20%. The remaining phones/products would continue to be made in China, Tawain, etc. This means the Chinese would still take pride in the fact that the iPhones they purchase are made in China.

      1. And when the Brazilians pass law that iPhones sold in Brazil be manufactured in Brazil? And the Indians? And the Russians? And the EU? Will Apple manufacture phones for each market in country?

        1. Robebo raises a very significant point which had been concerning me too. When Apple resisted cracking encryption the San Barnadino iPhone, one powerful argument was that if Apple were to agree to do it on that occasion, governments all around the world would demand that Apple must do it for them too.

          If Trump threatens to impose tariffs on iPhone built abroad and as a consequence Apple makes iPhones in the US, then you can be absolutely certain that many other countries will also threaten to impose tariffs unless iPhones are built locally.

          The solution that I would pursue would be to use highly automated assembly, which means that the jobs gained would be marginal, but similar factories can be located in multiple countries, which would allow Apple to take advantage of locally available factors, such as cheap or subsidised land, low energy costs, good transport links or preferential access to a large market. Building iPhones in multiple locations would also mean that unforeseen events such as natural disasters, political upheavals or a major fire or explosion would not totally stop production.

          1. ” Building iPhones in multiple locations would also mean that unforeseen events such as natural disasters, political upheavals or a major fire or explosion would not totally stop production.”

            because this is of utmost importance to the survival of the human race…

            1. No one I’ve seen has discussed the cost of setting up an independent supply chain that doesn’t use China.

              If it were done, both lines would have to run at the same time in order to get the kinks ironed out.

              The cost of doing that in any short amount of time would be immense.

          1. I could be crass and say that IDIOCY thy name is BOTVINNIK, but I don’t want to hurt your feelings. You’ll be demanding a SAFE SPACE at the THEATRE before we know it. Good luck fighting ISIS, you racist douche.

            OOMPA LOOMPA CHUMPITY DOO 🙂

    1. The President has significant powers and can void a Congressional-Executive Agreement, which all of these so-called Free Trade Deals are. They are not passed as Treaties which require a 2/3rds majority of the Senate to pass or rescind, but an Executive-Congressional Agreement is within a President’s authority to revoke as the Executive according to some Lawyers I have asked about this.

      Also, the President has significant powers if a trading partner is not following the rules of these trade schemes, and China has been manipulating their currency for a very long time. The President has a number of ways to raise the heat on China or make things less than comfortable there.

      As to the posit that a Republican Congress could or would, Paul Ryan is a Globalist and NeoLiberal (has nothing to do with the US understanding of liberal) like President Obama. The same is true for Mitch McConnell who both voted to give President Obama Trade Promotion Authority, which in many ways ties the hands of Congress to negotiate and pass these trade schemes. Trump will inherit this authority when he is sworn in.

      1. Most experts now believe that China is currently manipulating its currency to be stronger, not weaker. That is, its policy for the last year or more is to make the US more competitive against the Yuan.
        That means, to nobody’s surprise, that Trump is wrong.

      2. Also, although the president may legally be able to raise tariffs from a domestic standpoint, the World Trade Organization and treaties make it illegal from an international standpoint. Other countries would be able then to raise tariffs on US goods.

  2. Well, now, isn’t everyone happy with this analysis. Particularly Tim Cook who can now employ his prodigious business acumen and benefit both US workers and customers. You can lose, Tim, so just do it.

    1. He won by the rules they both he and Hillary designed their campaigns around.

      Prejudging him completely before he is in office is counter productive. He has already backed off several campaign promises in the direction of being more responsible than he seemed.

        1. So this is going to be the reality of Trumpworld is it? Promise like a champ, deliver like a chump. Defense by denial?
          So why isn’t ‘crooked Hilary’ on her way to prison?
          How long before that 1000 mile 50′ wall gets canned?

    2. Clinton can lead the popular vote by 60 million and it does not matter if she lost the Electoral College. She lost, get over it, she was an awful candidate.

      I worked with the Sanders Campaign and polling showed Bernie was by far the better General Election Candidate, but the Clinton Acolytes that run much of the Party and a rather large number of people determined to elect a woman President regardless of qualification shoved Hillary’s rather large ass over the line. She did not garner enough delegates o gain the nomination without Super Delegates, so in essence she was selected rather than elected.

      Had the Democrats been more concerned with winning instead of advancing another Clinton, Trump would be playing golf and bragging about his private sexual peccadilloes in peace and Senator Sanders would be appointing a Cabinet.

  3. That means a Dutch customer would have to pay a higher iPhone cost to offset the increased costs of the iPhones produced in the US for US consumers. That doesn’t seem like a good deal for European consumers. Why would we have to pay? You want the jobs, you pay for the additional cost.

  4. Ok my man_child orange agent chump friend, if it’s so easy to bring manufacturing back to the good ‘ole USA, how about setting an example. Oh…I don’t know, your clothes brand maybe, or that brassy jewelry, or…real jobs being at stake, source all your building materials like glass panel cladding within the US.
    You say you’re a natural leader, a deal maker, so lead by example. Put your money where your mouth is.

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