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Apple Explores Making iPhones in the US, Finds 'the Cost Will More Than Double': Nikkei (nikkei.com)
Apple is exploring the idea of making iPhones in the United States. But the company has realized that it will cost more than double to make the shiny new gadgets at home, according to a report on Japan-based outlet Nikkei. From the report:Key Apple assembler Hon Hai Precision Industry, also known as Foxconn Technology Group, has been studying the possibility of moving iPhone production to the U.S., sources told the Nikkei Asian Review. "Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.," a source said. "Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns." Foxconn, based in the gritty, industrial Tucheng district in suburban Taipei, and its smaller Taiwanese rival churn out more than 200 million iPhones annually from their massive Chinese campuses. Another source said that while Foxconn had been working on the request from Apple Inc., its biggest customer that accounts for more than 50% of its sales, Chairman Terry Gou had been less enthusiastic due to an inevitable rise in production costs. "Making iPhones in the U.S. means the cost will more than double," the source said.
Apple looks into making the phones in the US and their answer is to ask the Chinese company they're currently using, who has no interest in making them in the US, how well that would work? And surprise surprise, they came back with, "sorry, costs too much, you should keep making them here where we already have our facilities." I'm shocked, SHOCKED!
How about investigate US-based companies? How about an investment group who might be able to put together a group who could find a way to do it more cheaply here?
According to this article. The $649 iPhone 7 costs around $220 to make meaning that Apple gets roughly around $400 in profit.
That assumes that Apple has $0 development costs, $0 shipping costs, $0 distribution costs, $0 marketing costs, they have $0 related to sales, $0 costs due to keeping an adequate inventory of iPhones on hand to supply distributors and of course there is $0 wastage (theft, etc.). Also, because we all know iPhones never break down, Apple has $0 costs related to returns and warranty repairs. Methinks that the your formula:
retail price - manufacturing costs = Apples profit per iPhone sold
...does not quite hold water
Apple is selling at monopoly prices.
And yet, I - like most smart phone owners - have an Android phone that cost less than $200. There is no monopoly here, only a company that has a happy and loyal customer base.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
China ain't gonna just stand buy and let all their hard work go down the drain. Expect a fight.
We are already in a "fight". The proposals are merely about "fighting back" rather than just "taking it". For example see China adopting US and EU made jet engines but require technology transfer and manufacture in China, while simultaneously planning to switch to domestic jet engine companies in a decade after the necessary expertise is accumulated. If Chinese markets were to become more open to US goods and services (including forgoing the requirement of domestic partnerships), IP was better protected, and a rule of law more fairly applied (see Fellows paper shredder case) then its unlikely factories in China would be a "big" issue.
Apple tried to manufacture the iPhone in the US initially. The reason they didn't wasn't wages - in highly automated mass production, wages are a tiny percentage of cost of goods. The "deal breaker" was that the US didn't have enough industrial engineers to manage the production lines. Apple would have had to hire 100% of the new graduates from all US universities for 3 years to have enough engineering management to run the lines. The secondary issue is supply lines. All of the suppliers manufacture in or near Foxconn in China, so they can iterate on designs in hours, rather than weeks (shipping). So, to be in market years earlier, and with maximum agility, Apple had to be in China. Manufacturing on a large scale in the US was killed long before the iPhone launched.
Enable 3D printed prosthetics!
no they where not able to find industrial engineers willing to work 60-80 hours a week for $32K a year.