avatarby Kris CarlonNovember 18, 20160 comments


Apple has reportedly been investigating the feasibility of moving its iPhone manufacturing operations to the U.S., according to a new story in the Nikkei Asian Review. Quoting several sources, the publication notes that if such a relocation occurred it would “more than double” the production costs of the iPhone, which currently costs around $225 to make.

In June, Apple is said to have asked its two major Taiwanese iPhone assembly partners to investigate the possibility of moving iPhone production Stateside. Foxconn, Apple’s biggest partner, is reported to have looked into the request, despite chairman Terry Gou’s wariness of the increased production costs such a move would entail.

Apple’s other assembly partner, Pegatron, reportedly “declined to formulate such a plan due to cost concerns”. The Nikkei Asian Review quotes one unnamed source as saying that “making iPhones in the U.S. means the cost will more than double”.

Apple’s motivations for considering the move are not discussed in detail, although there is some speculation in the “Apple supply chain in Taiwan” that it may have partially been motivated by comments made by President-Elect Trump in January. At that time, Trump claimed that if elected, he would force Apple to make its devices in the U.S..

It must be noted that imposing import tariffs on China would not necessarily influence Apple to move production to the U.S. though. A cheaper alternative to China could easily be found, such as Vietnam.

iPhone 7 color options

According to Forbes, even if Apple were to move iPhone production to the U.S., the cost in assembly labor (which is said to be around $7 or $8 per iPhone) would only amount to $1.4 billion annually: just 0.008 percent of the U.S. economy. Even converting those labor wages to American standards the figure only rises to $5.2 billion a year.

While there is currently no further corroboration of this story, a potential move to U.S. assembly is of course a possibility for Apple. The company has more than enough money to do so, a “Made in America” stamp would certainly go down well with its customers and the enhanced privacy angle would also be of considerable marketing advantage.

But any such move would be much more likely to be motivated by financial or marketing concerns than political influence. Also, remember Motorola’s failed attempt to assemble devices in the U.S.. Then-CEO Rick Osterloh told me, after Motorola moved its assembly back to Asia, that the difficulties of managing the logistics of an Asian supply chain with U.S. assembly were too great.

Apple may have better logistics and deeper pockets than Motorola, but assembling in Asia simply makes more sense when the vast majority of components are sourced from there. No business wants to significantly increase its back end costs unless it also sees an even more valuable profit or brand image benefit.

Would you like to see the iPhone made in America? Would you be willing to pay more to see it happen?