Apple’s iPhone isn’t made in China — it’s made everywhere

Apple’s iPhone isn’t made in China, it’s made everywhere. Apple’s iPhone may be calculated as a Chinese import, because it is finished in China after a long procession around the world through Apple’s global supply chain, but most of the money that Americans spend on iPhones doesn’t travel far from home. Fred P. Hochberg uses iPhone as a prime example of how America’s trade deficit with China is artificially and substantially inflated, simply because China often happens to be place of final assembly.

Apple's iPhone isn’t made in China — it’s made everywhere
Apple’s iPhone 11 Pro Max
Fred P. Hochberg for The Wall Street Journal:

The iPhone was invented and designed in America, is powered by Central African minerals and is brought to life by European and Asian technologies, but both the World Trade Organization and the U.S. nevertheless classify it as a 100% Chinese export… The iPhone’s assembly is largely handled by the Taiwanese company Foxconn Technology Group, the world’s largest contract manufacturer of electronics. According to Reuters, that final assembly is estimated to represent just 3-6% of the cost of building each phone, or about $10 to $20 for every iPhone X…

In 2017, just over 69 million iPhones were sold in America. Because the trade deficit is calculated using factory costs—an estimated $230 per iPhone — rather than retail prices, iPhones would contribute about $16 billion to the U.S. trade deficit with China…

Yet every time a $999 iPhone gets sold to a U.S. customer, that money doesn’t get wired directly to Beijing. The global information provider IHS Markit estimates that for every iPhone X that gets sold, $110 is sent to Samsung, the South Korean conglomerate that makes iPhone displays… Another $44.45 finds its way to the iPhone’s memory chip suppliers: Toshiba Corp. of Japan and SK Hynix Inc. of South Korea. A little money goes to Singapore; a little goes to Brazil; a little goes to Italy; and a little goes to Corning, N.Y. The vast majority of those dollars go to Apple Park in Cupertino, Calif., while China earns only an estimated $8.46 for the labor and parts that it supplies.

MacDailyNews Take: As Hochberg writes, “American audio chips, Korean batteries, Congolese minerals, Japanese cameras, German accelerometers: The iPhone may well be the most truly global product yet.”

In March 2018, John Wu, an economic analyst with a U.S.-based think tank, the Information & Innovation Foundation, told Reuters, “With an iPhone, where China is just the final assembler, most of the value (contributed by China) is just the labor rather than the components themselves.”

We are building things in the United States and it’s not true that the iPhone isn’t built in the United States… There are components of iPhone built in the United States. The glass is from Kentucky. Many chips, silicon chips, are made form all over the United States… The very sophisticated Face ID module… [is] made in the United States in Texas… We have always made many of the parts here. What people fixate on, because it think it’s just a misunderstanding, is that they just see where the final product is assembled and say “Oh, that is not done in the U.S.” In a global world you begin to do things in a variety of countries… We know that Apple could only have been created in the United States. This company would not have started in any other country in the world. It would not have flourished in any other country in the world… We love this country. We’re a patriot. This is our country. We want to create as many jobs as possible in the U.S. We don’t need any political pressure to do that. We’ve already been doing this.Apple CEO Tim Cook, April 2018

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006

8 Comments

  1. If cost of assembly is $10 to $30 in China, then assemble in N. America and increase the cost of assembly to between $30 and $90. Save on shipping and pollution whilst creating a few jobs closer to home. Everything is a trade off.

    1. Sadly building in America would add $200 to costs thanks to unionsraping the American economy. Dumbocrats have screwed and damaged the USA, and should never be forgiven. Bernie, Dingler, CitizenX, all the kind of scum that should be lined up and fuxecuted until dead.

      1. Anti worker Pinkerton Republican, unions seem to work in the Rhineland…..But the English speaking countries can’t seem to work with those first world workers who are the backbone of all western countries. It can’t all be a lease/payday loan economy.

      2. Well I don’t sleep easy knowing my phone was assembled by workers who need suicide nets outside their building due to the crappy pay/work conditions.

    2. the argument makes no sense. If assembly were to be done in US, they would still need to ship the Chinese, European, African parts to US. Afterwards they would still need to transport final products back to the other continents. Assembly in China is probably the most essential part of the assembly to put costs down to what it is.

  2. The fact that Apple won’t tell us what % of the i phone is made in china makes me suspicious. I think it’s much higher than they want us to believe

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