More inflation, on the very smartphones, tablets, and computers that everyone is commenting on. When prices for tech skyrocket, let's see who survives the midterm elections.
Apple should build its products in the USA. This is no easy feat, as it requires an entire manufacturing ecosystem of makers and suppliers. But still. Apple has the money to make this happen and the patience to stick with it for the 2 decades it would require. Now that would be a legacy Tim Apple could be proud of.
Intel really screwed up. They missed mobile and then missed AI. Not sure how they get back to being pre-eminent.
Apple should build its products in the USA. This is no easy feat, as it requires an entire manufacturing ecosystem of makers and suppliers. But still. Apple has the money to make this happen and the patience to stick with it for the 2 decades it would require. Now that would be a legacy Tim Apple could be proud of.
Intel really screwed up. They missed mobile and then missed AI. Not sure how they get back to being pre-eminent.
But no way we mix it, it will cost consumers more and will take a decade to accomplish.
I despise Trump, but I also hate government handouts to massive companies. If this results in more manufacturing in the US, cool. If it results in higher prices for consumers in the US, oh fucking well. There are more important things than keeping the price of electronics low, and we should focus on those. (mass deportations, removing funding for scientific research, eroding away of checks and balances...)
The problem over the last 60 years. Handouts hasn’t led to anything there are no new jobs coming back to the red states or any other state for that matter, the first instinct by the American business lawyer, accountant MBA class is to outsource everything, you can point to many American companies Ford, GM, US Steel they have had so many opportunities to turn it around in the face of worldwide competition most of the time they spend their time blaming the people who work on the production line like they’re the ones who make the decisions, what’s sad? Is that a good many of the working class blue collar people who work the production lines fall in line and accept the blame every time and working class outside the company is even worse in their appraisal.
The new leadership in Washington even wants to take away Social Security cause in their eyes It’s an undeserved entitlement despite the fact that working Americans pay into it. Only problem is 40% of US citizens reach retirement age and that’s the only pension they have in non-union America.
(if Forbes or the government say the number is 40% the actual number is over 50%) similar to the actual unemployment rate, the unemployment rate has never been less than 20% in anyone's lifetime and it’s very easy to measure simply the total number of adults over 18 who have a job and the total who don’t……
We really need to look at the root causes behind the situation that we are now in when it comes to the globalization of manufacturing and production. Within the semiconductor industry today, we are where we because of shifts in capital investment related to globalization and offshoring that started in the 1970s. Purely from the time standpoint there is no way we can untangle what has already been done over nearly 50 years in a very short period of time or simply by imposing tariffs on imports that are ultimately paid for by US consumers.
No matter how you look at this issue from an economic perspective any major changes are going to fall on US consumers. You could look at how semiconductor designers and products manufactured using the offshore-fabricated designs, like Intel, Apple, etc., benefited their bottom line both in unit/component costs and saved them the massive cost of building fabs. If component and product makers were the beneficiaries of creating the globalization entanglement shouldn't they be the ones who pay the cost of untangling it?
Maybe not so fast. Who else benefitted? We did. As consumers we were able to purchase products and access outsourced services for much lower prices than we could ever have imagined. Look at the price of a 1980 TV with its pathetic resolution and massive weight compared to what you can purchase today for much less than the 1980 price. You can buy a 55" Class 4K TV at Walmart today for as low as $228.00 USD. If consumers were the beneficiaries of creating the globalization entanglement shouldn't we be the ones who pay the cost of untangling it?
Nobody is going to get off the hook without paying a price. The theory goes that if manufacturers pay more for imported components they will simply pass it off to consumers. If they do it 1-for-1 that would disproportionately penalize consumers. At the very least manufacturers should bear a proportionate share of the tariffs without being allowed to pass it all on to consumers. Of course this also a gut punch to investors who have been essentially double dipping on the benefits of outsourcing with lower costs and higher profits. Suddenly the whole calculus for "Who Pays?" creates its own entanglement.
The one thing that is highly subjective is whether the foreign manufactures and service providers bear any responsibility. While they can be accused of baiting US firms with predatory enticements, they are in my opinion largely blameless. They have a workforce and an economy that allows managers and workers at all levels to substantially enhance their quality of life at levels of compensation that US managers and workers would find unsatisfactory due to cost of living and cost of doing business differences. You cannot blame people for wanting a better life on either side. This cost of doing business differential coupled with the minuscule per-unit costs associated with containerized shipping has a huge pull on US companies trying to maximize profits and increase shareholder value.
Blaming foreign countries we trade with fordoing exactly what we asked them to dofor our benefit is ridiculous and massively disingenuous.
That's the economic Gordian knot side of the situation we are in today. But there is one broad sword that can cut through the knot, and that is national security. This is the ultimate trump card that is being played by the current administration, not only on trading but on immigration and regulations and safeguards that have been put in place to avoid other dangers to the economy, society, the environment, and global relations. If it took us 50 years to get where we are it's going to take a couple of decades to untangle - that is, unless the broad sword is used to cut through the knot, which would result in everyone concerned needing at least a century to recover from.
Absolutely agreed. Going back in history, America transitioned from a product economy to a services economy. This was due to the cheaper and even slave labor overseas.
So, though there was a solution to product prices snd the cost of doing business, there was an ethical issue.
Beyond that, it seems the “it’s cheaper in China” philosophy has a time limit. When those nations, who greatly benefitted (and grew from third world to very powerful) became hostile toward the hand that feeds them, it’s time to dial it back and put them in check. Anything less is inviting trouble down the line, perhaps sooner than thought.
At some point, the USA is going to have to take control and bring things home, while still allowing for overseas production.
Might as well start now before the country becomes too weak to do anything about it later.
It’s a tariff. Not a ban.
Germany had the strongest healthiest economy in the EU, and it was because they still believed in making things and doing it within their country a service only economy only leads to Brexit UK where you have deindustrialize yourself and are left with nothing, how many parasites, real estate agents, derivative selling stock brokers, bankers, landlords and equity companies do you need? To top it off most spend their time chasing the hounds or blaming the NHS.
Midterm elections are already going to be interesting…….
Apple should build its products in the USA. This is no easy feat, as it requires an entire manufacturing ecosystem of makers and suppliers. But still. Apple has the money to make this happen and the patience to stick with it for the 2 decades it would require. Now that would be a legacy Tim Apple could be proud of.
Intel really screwed up. They missed mobile and then missed AI. Not sure how they get back to being pre-eminent.
Maybe wind back to Apple statements by Jobs, Cook, and Everyone one at who has been asked has said over the years about building in the USA. The Education of engineers to make that happen has been lacking for decades. It is not just a matter of dollars. In the meantime Apple created many many thousands of Job and business opportunities in app development.
Trump didn't offer any indication of how much the tariffs could be on chip imports.
You could have shortened this article to a couple of sentences. Trump says he wants tariffs, but hasn’t instituted them yet. So, nothing is known yet.
If and when these tariffs are instituted, it’s pretty obvious that you will need to look at the exceptions list. It’s going to be complicated.
On the high end of the scale, TSMC makes Nvidia GPUs, the current darling of the business world across all political aisles. Then, TSMC also makes AMD CPUs, Intel CPUs, and probably AMD GPUs. Obviously SoCs for Apple devices. Virtually every high end logic device on the planet is touched by TSMC.
Intel 4/7 chips are basically the only high end logic devices that are USA made. But if you have not heard, Intel is trying to stay solvent and relevant right now because their management fucked up for 10 years straight. Bankruptcy is possible. Intel needs to saved? In the CMOS chip world, if you are lapped, you’re dead. If someone can think of a foundry that fell behind and caught up, let me know.
TSMC also makes SoCs for game consoles, virtually all of the cell phone SoCs, the modems that go into cell phones. Then the lagging nodes (7, 10, 14 nm nodes) make chips for virtually everything electronic. Internet of shit devices, toys, car computing units, airplane boxes, TVs, anything using chips.
Seems all but certain Nvidia GPUs will be exempted. We will see about Apple. AMD could be fucked. You guys want that? TSMC N4P in Arizona will be in high demand and when demand goes up, and prices will go up. Additional fabs will take minimum 4 to 5 years to ship their first units.
If you want to blame someone or something for the USA losing its edge for semiconductor manufacturing, blame the hero-ball management that has infested USA business culture. They didn’t move manufacturing overseas, they failed to keep up. None of them made merchant foundries successful. AMD/GlobalFoundries, IBM, Motorola, Texas Instruments. It’s a long list. Intel has been trying. Hasn’t been a great start.
All this failure usually means it is endemic to management, business and engineering culture in the country. Tariffs aren’t going to fix it.
Perhaps you can blame the USA gov’t for not breaking up Intel in the 00s? Intel’s success sucked up all the chip manufacturing in the country resulting in it being the lone USA manufacturer, one that only produced chips for themselves. Perhaps great for the USA, until they failed. They should have been broken up are the USA should have been stringent about 2nd sourcing.
Now? Not sure if anything leading edge tech-science can be successful in the USA. It’s not cheap labor that is the problem. It’s a highly educated STEM workforce that is needed, good management is needed, but current American culture hates it.
Why? Apple and Nvidia were both founded by 2nd generation immigrants. Tesla by a 1st gen. The core of Apple Silicon is from UK design (ARM) owned by a Japanese company (Softbank) with chips produced by a Taiwanese company (TSMC) using Dutch tools (ASML). You want to replace a global supply chain, keep the product quality, and believe everyone else would accept it? You don't even have the workers for doing so.
Having stocks in Apple is a great way for foreigners to siphon profits out of USA. Step 1 - fix your taxation.
Any business that imports products will pass the cost of the tariffs to the us customer.
If sales go down because of that, the business will need to determine whether investing in us manufacturing will make them money.
For chip business the cost of creating a factory in the us and hiring / training personnel is huge. Trump may have to do what China does and make it so difficult to import that you have to build in the us.
We upgraded the entire family Apple equipment starting in November so it all the latest and greatest. We could see this coming. Bribes not withstanding, the tariffs are coming and other restrictions are coming.
While a M5 Ultra Mac Studio would be great at the $8,000 level, the crowd will vanish if it is at the $12,000 level.
I believe all the Dodge Ram trucks are made in Mexico and lots of other foreign vehicles are made in Windsor Ontario. Chevy and Ford are mostly domestically made. Slap a 25% tariff on a Dodge truck and sales will turn into distant memories.
So the tariffs are really being used to destroy the USA as we know it. With Oligarchs and their helicopters and private jets, they can get to medical care abroad while our domestic medical system falls apart.
‘Note that a legal immigrant such a Jobs or Musk is completely different than illegal alien and / or foreign country.”
Steve Jobs like Barack Obama was born in the United States to a woman that was an American citizen, both had dads who were born overseas one Syrian one Kenyan, who were here in the United States, both going to college on a student visa at the time. Steve Jobs birth mom decided to give her baby up however, she later on decided to keep Steve’s sister fathered by the same Syrian student Steve’s biological father and she like Steve was an (American citizen at birth), Barack‘s mom however, decided to keep her baby who was also an American citizen,at birth…. Steve Jobs and Barack have nothing in common with Elon at birth. Both were American citizens from day one and neither were immigrants.
‘Note that a legal immigrant such a Jobs or Musk is completely different than illegal alien and / or foreign country.”
Steve Jobs like Barack Obama was born in the United States to a woman that was an American citizen, both had dads who were born overseas one Syrian one Kenyan, who were here in the United States, both going to college at the time. Steve Jobs birth mom decided to give her baby up however, she later on decided to keep Steve’s sister fathered by the same Syrian student Steve’s biological father she like Steve was an (American at birth), Barack‘s mom however, decided to keep her baby who was also an American at birth…. Steve Jobs and Barack have nothing in common with Elon at birth. Both were American citizens from day one neither were immigrants.
So.. then Nubus was even more wrong than I thought. Great post. Thanks.
Was it.
seems accurate to me to say 2nd generation being the child of an immigrant parent and most likely having an option to choose between the countries as to where to make their home. Having potential cultural links in both.
The really funny thing is, that apparently a lot of US Americans, including The Orange Ogre, don't understand that tariffs (in reality import tax) are payed by the US Americans themselves. As for TSMC, the only effect of tariffs will be punishing Apple, and thereby their US American customers, directly - Apple can't just find another supplier for A- and M-series SOCs, so in principle Apple will be paying the burden of tariffs and thereby their US American customers
So yeah, it's a good idea to build things in America, so that Americans can benefit
It is a terrible idea. There is a limit to the number of Americans. You need to maximize the value delivered per citizen instead of having companies fighting for the same workers causing inflation. Having foreigners assemble stuff locally and taking the profits to USA is pretty smart. USA wouldn't be richer if cigars had to be handmade in Iowa. Spend your time where value is created.
It all comes down to labor. Are American companies willing to bring mass manufacturing back to America? A typical Chinese Foxconn factory employs 100,000 to 200,000 workers and pays them roughly $2-3 an hour depending on overtime. While the base shift at Foxconn is usually 8 hours, overtime of 2-4 hours is common.
The average minimum wage in America is $7.50. Now with all these deportations happening, what American is willing to work at a factory, for 8-12 hours a day, making minimum wage to manufacture iPhones?
There are so many unemployed American adults. I think there are plenty who’d see these jobs as answered prayers.
Unemployment is at historic lows and has been for sometime and the United States doesn't have the labor for to manufacture iPhones at the scale Apple makes them. Production lines like that required skilled workers (engineers) at a level that we don't have.
I don't think the administration understands the global semiconductor supply chain. And even if you could find people with the skills to work in a fab, the amount of money and time it takes to construct one would mean those tariffs would be in place for many years, making the action somewhat pointless.
Not reported in article: the Arizona chip plant’s chips still must be shipped overseas for packaging, just like other parts in the Apple products. Tim Cook was promoted by Steve Jobs precisely for that expertise. It saved Apple then.
Now, another CEO must be groomed who can assemble products in the USA, and make the most vital parts here too. Just in time for Tim to retire.
I wonder if Tim is regretting that $1m bribe? or wondering if he should have made it $100m?
Tim is facing the realities of doing business in China. Tariffs will force him to confront the China challenge. Apple could possibly build Mac’s or iPads in the US using lots of automation. But iPhones still require lots of cheap manual labor which isn’t available in the US. So Apple will have to accelerate moving more production out of China. Which will upset the Chinese government to the point they might restrict iPhone sales in China. A tough situation for Apple. Trump will keep China from doing anything to Taiwan, which buys TSMC some time.
Comments
Intel really screwed up. They missed mobile and then missed AI. Not sure how they get back to being pre-eminent.
The new leadership in Washington even wants to take away Social Security cause in their eyes It’s an undeserved entitlement despite the fact that working Americans pay into it. Only problem is 40% of US citizens reach retirement age and that’s the only pension they have in non-union America.
https://www.forbes.com/sites/andrewbiggs/2020/01/27/factcheck-do-40-of-retirees-rely-on-social-security-for-their-entire-income/
(if Forbes or the government say the number is 40% the actual number is over 50%) similar to the actual unemployment rate, the unemployment rate has never been less than 20% in anyone's lifetime and it’s very easy to measure simply the total number of adults over 18 who have a job and the total who don’t……
Midterm elections are already going to be interesting…….
Intel 4/7 chips are basically the only high end logic devices that are USA made. But if you have not heard, Intel is trying to stay solvent and relevant right now because their management fucked up for 10 years straight. Bankruptcy is possible. Intel needs to saved? In the CMOS chip world, if you are lapped, you’re dead. If someone can think of a foundry that fell behind and caught up, let me know.
All this failure usually means it is endemic to management, business and engineering culture in the country. Tariffs aren’t going to fix it.
Perhaps you can blame the USA gov’t for not breaking up Intel in the 00s? Intel’s success sucked up all the chip manufacturing in the country resulting in it being the lone USA manufacturer, one that only produced chips for themselves. Perhaps great for the USA, until they failed. They should have been broken up are the USA should have been stringent about 2nd sourcing.
Having stocks in Apple is a great way for foreigners to siphon profits out of USA. Step 1 - fix your taxation.
While a M5 Ultra Mac Studio would be great at the $8,000 level, the crowd will vanish if it is at the $12,000 level.
I believe all the Dodge Ram trucks are made in Mexico and lots of other foreign vehicles are made in Windsor Ontario. Chevy and Ford are mostly domestically made. Slap a 25% tariff on a Dodge truck and sales will turn into distant memories.
So the tariffs are really being used to destroy the USA as we know it. With Oligarchs and their helicopters and private jets, they can get to medical care abroad while our domestic medical system falls apart.
‘Note that a legal immigrant such a Jobs or Musk is completely different than illegal alien and / or foreign country.”
Steve Jobs like Barack Obama was born in the United States to a woman that was an American citizen, both had dads who were born overseas one Syrian one Kenyan, who were here in the United States, both going to college on a student visa at the time. Steve Jobs birth mom decided to give her baby up however, she later on decided to keep Steve’s sister fathered by the same Syrian student Steve’s biological father and she like Steve was an (American citizen at birth), Barack‘s mom however, decided to keep her baby who was also an American citizen,at birth…. Steve Jobs and Barack have nothing in common with Elon at birth. Both were American citizens from day one and neither were immigrants.
they are a citizen but might have options.
Unemployment is at historic lows and has been for sometime and the United States doesn't have the labor for to manufacture iPhones at the scale Apple makes them. Production lines like that required skilled workers (engineers) at a level that we don't have.