Chinese manufacturers not likely to follow Apple iPhone manufacturing migration to US

Posted:
in iPhone edited December 2016
Despite some research by Foxconn with a slightly positive angle towards moving some efforts to the U.S., other Apple supply chain vendors are likely to not move, citing labor and operating costs.




According to Chinese-language qq, suppliers like Lens Technologies, an iPhone glass vendor, will not set up shop in the U.S., even if Foxconn does. Lens cites high-wage workers and reluctance amongst the U.S. workforce to accept variable schedules depending on surges and dips in product demands.

Positives to U.S. factories cited by Lens are lower power and land costs.

Another, unnamed, Apple parts vendor quoted by the report says that a complete supply chain won't exist in the U.S., making the entire fabrication process more nimble in China. An order involving molding metal components takes about 10 days in Shenzhen, but will likely take a month or more in the U.S. without a complete process in-country.

In June, Apple reportedly asked iPhone assemblers Foxconn and Pegatron to evaluate the possibility of moving manufacturing efforts to the U.S. Foxconn Chief Executive Terry Gou was said to be critical of the plan, saying that labor and other associated costs would more than double, should the plan come to fruition.

Pegatron denied to develop a plan, citing obvious cost concerns.

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.

"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 percent 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. Studies vary on the exact impact, but range between a 10 and 20 percent in Apple's cost to manufacture the phone, between increased labor costs, and the need to ship some components and materials to the U.S. plant.
patchythepiratebb-15zohaali146
«13

Comments

  • Reply 1 of 45
    lkrupplkrupp Posts: 6,618member
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    rob53chaickaDeelronpropodlostkiwiviclauyycration aljony0
  • Reply 2 of 45
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    edited December 2016 rob53chaickapalomineblastdoorpropodMacProjony0
  • Reply 3 of 45
    This is not surprising. Electronics components is a brutally price sensitive business, and there's no way that it sets up in any sufficient quantities in the US. Automation notwithstanding. 
    designrluckryan
  • Reply 4 of 45
    macxpressmacxpress Posts: 4,730member
    rob53 said:
    designr said:
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    Trump only cares about Trump and his money. He doesn't care about Americans or anyone else in the world unless they can make him money. The majority of people who voted for him just don't understand this fact. I would have thought they would have after watching his stupid "reality" TV shows. Trump doesn't really care about bringing jobs to the US or worrying about Made in the Grand old US of A, he only cares about his bottom line and how he can make more money. Everything he spouted during the election was BS to get him elected, although I'm sure he never thought he'd pull off the grandest of reality TV shows by actually winning. Now he has to do something legitimate that doesn't plunge the US and the world into the greatest of depressions, which he is capable of doing very easily.
    Take your bashing elsewhere. It is people like you that get this country no where quick. Start listing the things you have done to make a contribution to this country. Short list? That is why you are so angry?
    The truth hurts doesn't it Techprod1gy....
    rob53lmac
  • Reply 5 of 45
    This is probably the reality of the situation. However, we need to be committed and driven to improve the manufacturing situation. Many have said this is dead in the US. That it is too late. That is poor thinking. There are significant opportunities for manufacturing in the US. We need to work hard together to make it a reality. It will not be easy. We have a very high percentage of people that will not work. It is an uphill battle but one that is worth fighting. We also have to realize that the landscape has changed. This means we have to get schools that are geared right for what we need in the future. Not what we needed 20 year ago. Side note. I visited a college campus a few months ago. It is a great university but I was surprised at how ill equipped they were to build on the future. We have to adapt to the times. A bit preachy I know but some people have to wake up and move the ball down the field or we will be left behind.
    patchythepiratelmac
  • Reply 6 of 45
    macxpress said:
    rob53 said:
    designr said:
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    Trump only cares about Trump and his money. He doesn't care about Americans or anyone else in the world unless they can make him money. The majority of people who voted for him just don't understand this fact. I would have thought they would have after watching his stupid "reality" TV shows. Trump doesn't really care about bringing jobs to the US or worrying about Made in the Grand old US of A, he only cares about his bottom line and how he can make more money. Everything he spouted during the election was BS to get him elected, although I'm sure he never thought he'd pull off the grandest of reality TV shows by actually winning. Now he has to do something legitimate that doesn't plunge the US and the world into the greatest of depressions, which he is capable of doing very easily.
    Take your bashing elsewhere. It is people like you that get this country no where quick. Start listing the things you have done to make a contribution to this country. Short list? That is why you are so angry?
    The truth hurts doesn't it Techprod1gy....
    It was an unproductive rant that does nothing. It is an opinion. Not necessarily truth or fact.
    designr
  • Reply 7 of 45
    designr said:
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    Then I would like the option to freely move to any country where my skills are in demand and the cost of living, quality of life and wage ratio works in my favor
    techprod1gy
  • Reply 8 of 45
    "Do more with Less" - I hear this so often that it starts to influence behaviours. Are Americans ready to really accept this? There are definitely many parts of the world that have been doing so - doing a lot more for a lot less money.
    hungover
  • Reply 9 of 45
    macxpressmacxpress Posts: 4,730member
    designr said:
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    Then I would like the option to freely move to any country where my skills are in demand and the cost of living, quality of life and wage ratio works in my favor
    You already have that option. Nobody is making you stay here or anywhere. 
    designr
  • Reply 10 of 45
    designr said:
    lkrupp said:
    Apple suppliers to moving to the U.S. would require them to figure out how to produce the same parts at the same price because Apple is certainly not going to pay more. That, of course, would require intensive automation which would limit the number of jobs created. And jobs is supposedly the object of this political game is it not? 
    It is ostensibly about job creation. But being able to say "made in America" or some other rather meaningless "mission accomplished" is the real reason.

    I surely hope Trump doesn't get anywhere near an import tariff. The effects will be terrible for Americans. If he was wise and knowledgeable about economics, trade and things like comparative advantage, he would would to unshackle international trade even more, not restrict it. Trade helps to generate wealth and prosperity. Trade restrictions do the opposite.
    Then I would like the option to freely move to any country where my skills are in demand and the cost of living, quality of life and wage ratio works in my favor
    What countries would meet that criteria for you? Do you think you don't have that option? Why or why not?
  • Reply 11 of 45
    chaicka said:
    "Do more with Less" - I hear this so often that it starts to influence behaviours.
    Do you think this is a bad thing?
  • Reply 12 of 45
    blastdoorblastdoor Posts: 1,888member
    Take the politics elsewhere, people. 

    Just shut up already, on Trump. On both sides. 
    I strongly disagree. 

    Concerned citizens absolutely should debate these types of issues. In fact, I think the future of democracy in the US -- and the world more generally -- depends now, more than ever, on concerned citizens paying attention to what is happening and talking about it. 

    I recognize that AI is a privately owned company and that the editors are well within their rights to suppress such debate. But I hope they won't. Instead, I'd prefer that they just enforce rules about personal attacks, trolling, and off-topic posting. Given the nature of this story, I think the debate is on-topic. If AI really doesn't want anything other than technology discussions, then they should avoid posting stories that stray from the world of technology. 
    designrrob53robertwalterlmac
  • Reply 13 of 45
    blastdoor said:
    Take the politics elsewhere, people. 

    Just shut up already, on Trump. On both sides. 
    I strongly disagree. 

    Concerned citizens absolutely should debate these types of issues. In fact, I think the future of democracy in the US -- and the world more generally -- depends now, more than ever, on concerned citizens paying attention to what is happening and talking about it. 

    I recognize that AI is a privately owned company and that the editors are well within their rights to suppress such debate. But I hope they won't. Instead, I'd prefer that they just enforce rules about personal attacks, trolling, and off-topic posting. Given the nature of this story, I think the debate is on-topic. If AI really doesn't want anything other than technology discussions, then they should avoid posting stories that stray from the world of technology. 
    I agree. The article and the issue (investigation of manufacturing feasibility in the US) is being driven by political reasons (threats of tariffs and other trade issues in which the government and, thus, politics is involved). That said, I think Rob53's comment was just an outright rant and does not contribute much to the immediate subject at hand.
    blastdoor
  • Reply 14 of 45
    rob53rob53 Posts: 1,976member
    blastdoor said:
    Take the politics elsewhere, people. 

    Just shut up already, on Trump. On both sides. 
    I strongly disagree. 

    Concerned citizens absolutely should debate these types of issues. In fact, I think the future of democracy in the US -- and the world more generally -- depends now, more than ever, on concerned citizens paying attention to what is happening and talking about it. 

    I recognize that AI is a privately owned company and that the editors are well within their rights to suppress such debate. But I hope they won't. Instead, I'd prefer that they just enforce rules about personal attacks, trolling, and off-topic posting. Given the nature of this story, I think the debate is on-topic. If AI really doesn't want anything other than technology discussions, then they should avoid posting stories that stray from the world of technology. 
    Everything about this article and trying to force manufacturers to move to the US is absolutely political. Since Trump is the president-elect, his stated policies are fair game for every discussion. I have regularly seen rants about President Obama so what's the difference? This political debate is not off-topic, it is on the topic of companies wanting and not wanting to locate manufacturing facilities in the US. If Trump attempts to force Apple and others to locate manufacturing facilities in the US, it will affect AAPL, which is also political. Yes, I'm upset the people of the US voted for someone who could care less about the People of the US, I'm trying to deal with it, but I'm also trying to prepare for the worst Trump has to offer. If all of you (others, not @blastdoor) ;who don't thing everything is political, then you need to open your eyes and understand what's going on. 
    blastdoorlostkiwi
  • Reply 15 of 45
    Mike WuertheleMike Wuerthele Posts: 4,102administrator
    blastdoor said:
    I recognize that AI is a privately owned company and that the editors are well within their rights to suppress such debate. But I hope they won't. Instead, I'd prefer that they just enforce rules about personal attacks, trolling, and off-topic posting. Given the nature of this story, I think the debate is on-topic. If AI really doesn't want anything other than technology discussions, then they should avoid posting stories that stray from the world of technology. 
    Respectful, reasoned, and rational discussions about the issues at hand and how they relate to the tech industry as a whole is fine.

    Name-calling, calling news you don't personally believe in "fake news," and inflaming a discussion for no other reason than to incite bad behavior is not.
    designrben20gatorguylostkiwianantksundaramdysamoria
  • Reply 16 of 45
    Like the article mentioned, if manufacturing is moved to the US then iPhone pricing would increase.  Apple is not going to agree to lower profits, and US workers demand higher wages.  Pretty simple really.
  • Reply 17 of 45
    blastdoorblastdoor Posts: 1,888member
    I think the scenario in which Apple might move manufacturing to the US is one in which they get substantial incentives to do so. 

    What would those incentives be? Well... how about

    1. a massive tax cut that would allow them to repatriate foreign taxes
    2. a massive increase in tariffs on the imports of competing products
    3. zero enforcement of anti-trust laws against Apple
    4. long term federal government contracts for Macs, iPhones, and iPads

    Those things could enable Apple to become the US monopolist (or near-monopolist) in smartphones and tablets, and would give them the opportunity to significantly expand Mac marketshare in the US. 

    Such a deal would be terrible for consumers. It would create some jobs, and that would be great publicity for Trump. The loss to consumers would be far greater than the gains to workers, but that wouldn't be obvious, certainly not right away. 

    Yes, there would be a trade war, and that would probably lock Apple out of China. But from Apple's point of view, that tradeoff might be acceptable -- even desirable. China is a risky place to do business for an American company, even in the best of times. Giving up China in exchange for a near-monopoly in the US might be a good deal. 

    Note -- I'm not happy about the scenario I'm describing here. Not at all. I'm just trying to figure out what might happen. 

    lostkiwi
  • Reply 18 of 45
    You already have that option. Nobody is making you stay here or anywhere. 
    No I do not.
  • Reply 19 of 45
    Speaking of foreign policy, tech and tariffs, the Chinese pose another significant issue for Apple, given their unyielding attitude on Taiwan. TSMC and other important Taiwanese located suppliers will be caught in the crosshairs. This upheaval would have a dramatic effect on Apple. The threats are hardening and the timing could be sooner than expected.
    this to is disturbing!
    ration al
  • Reply 20 of 45
    radarthekatradarthekat Posts: 2,933moderator
    I have an idea.  Let's force people living in New York City to drill their own oil wells and farm cattle.  Let's tell the folks in Alaska to grow their own cotton for the shirts they wear.  Somehow the common sense approach of producing where conditions are most favorable or most economically efficient eludes the emotional minds of those who demand we bring jobs here; jobs that have no advantages to being here.
    edited December 2016 designrrob53anantksundaramration alluckryan
Sign In or Register to comment.