Apple exploring the possibility of moving iPhone manufacturing to United States
Primary iPhone assemblers Foxconn and Pegatron are said to have been evaluating the ability of the company to shift production of Apple's mobile devices to the U.S., with the verdict mixed on if the move would be cost-effective.
"Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.," a source told the Nikkei Asian Review. "Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns."
Reportedly, Foxconn Chief Executive Terry Gou was critical of the plan, saying that labor and other associated costs would more than double, should the plan come to fruition.
Pegatron was also reportedly tasked with developing a U.S. manufacture report, but declared the shift impossible due to costs.
The study was probably spawned because of potential political pressure and taxation for Apple promised by President Elect Donald Trump during campaigning for the office. Trump's campaign promise of a 35 percent tariff levied against products like the iPhone manufactured overseas, is presumed by the President Elect to give companies a significant economic incentive to bring manufacturing jobs back to the U.S.
"Although TSMC is very clear that it would be much more expensive to make chips outside of Taiwan, it's inevitable for the world's largest contract chipmaker to take 'Made in the U.S.' into consideration," said Sanford C. Bernstein analyst Mark Li. "The alternative is that it would lose Apple orders without moving to America."
A 35 percent cost increase, regardless if induced by labor and material shipping costs, or a tariff would likely passed on to consumers, making a $649 base-model iPhone retail for around $876.
"Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.," a source told the Nikkei Asian Review. "Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns."
Reportedly, Foxconn Chief Executive Terry Gou was critical of the plan, saying that labor and other associated costs would more than double, should the plan come to fruition.
Pegatron was also reportedly tasked with developing a U.S. manufacture report, but declared the shift impossible due to costs.
A 35% cost increase, regardless if induced by labor and material shipping costs, or a tariff would likely passed on to consumers, making a $649 base-model iPhone retail for around $876.
The study was probably spawned because of potential political pressure and taxation for Apple promised by President Elect Donald Trump during campaigning for the office. Trump's campaign promise of a 35 percent tariff levied against products like the iPhone manufactured overseas, is presumed by the President Elect to give companies a significant economic incentive to bring manufacturing jobs back to the U.S.
"Although TSMC is very clear that it would be much more expensive to make chips outside of Taiwan, it's inevitable for the world's largest contract chipmaker to take 'Made in the U.S.' into consideration," said Sanford C. Bernstein analyst Mark Li. "The alternative is that it would lose Apple orders without moving to America."
Apple's stance on the matter
"To make iPhones, there will need to be a cluster of suppliers in the same place, which the U.S. does not have at the moment," Apple CEO Tim Cook said in an Dec. 2015 interview about a possible shift. "Even if Trump imposes a 45% tariff, it is still possible that manufacturers will decide to continue production overseas as long as the costs together with the tariffs are lower than the amount they need to spend on building and running production lines in the U.S."A 35 percent cost increase, regardless if induced by labor and material shipping costs, or a tariff would likely passed on to consumers, making a $649 base-model iPhone retail for around $876.
Comments
Even then, I would note that these would only be shipped and sold within the U.S. and possible Canadian markets, and competitors would have the same tariff hurdle. The tradeoff is higher prices against increased U.S. jobs, but those jobs aren't going to the rust belt without subsidies, so yet again, cost increases. Most of the jobs will end up in Southern population centers, Texas primarily, and those jobs will go to first and second generation Hispanic Americans, who will be more accepting of a lower wage base.
Apple has manufacturing plants in every country they sell in. This would reduce shipping times and costs in the long run correct?
Or am I wrong ?
Foxconn: "OK. But it will involve robots. Lots. Of. Robots."
Now, let's say Apple does your "manufacturing plants in every country they sell in" plan. How would Antigua and Barbuda, with a population of only 85,600 (est. 2009) be able to effectively set up shop so that they could sell the very few units they sell in that country? And that's just one example. There are innumerable small countries, countries that don't have the manpower, resources, expertise, cost savings, or sales numbers to make this viable. The only way it works is in a global economy, not one where you separate each and every country.
I've been in my share of clean rooms and making chips is not a labor intensive process.
we always have the options of bringing in large numbers of immigrants that are dieing to come to the US and have special development zones that have lower minimum wages for a transition time. it's a win win for everyone. along with special economic zones where have massively reduced tax rates for factories brought back home.
we also can consider imposing taxes on goods from other countries that have ridiculously low minimum wages. that will force other countries to stop exploiting their people for politician and elite profits at the same time helping to make our country more competitive.