Apple has reportedly asked key iPhone manufacturer partners, namely Foxconn and Pegatron, to investigate ways to bring the iPhone assembly supply chain into the United States. Today, all iPhones (and almost all Apple products) are manufactured and assembled in China. The Nikkei report says Foxconn is actively researching ways to make iPhones in the US although Pegatron apparently refused Apple’s request over cost concerns. A source is quoted as saying that domestic production of iPhones means increasing costs by “more than double”.
Apple has received some criticism over the years for its dependence on Chinese manufacturing but the issue has come into the limelight recently as Donald Trump, now US President elect, claimed that he will force Apple to build its “computers and things” in the United States.
Like many Trump policies, to what extent he intends to put that plan into action is unknown although it still raises uncertainty about Apple’s supply chain. The report says sources in the Apple supply chain believe Trump will push Apple to make some percentage of iPhones in the United States. Whatever the reality, it makes sense for Apple to explore domestic iPhone production and be necessarily prepared for any eventuality.
The report does not say that Apple, Foxconn or Pegatron have any current plans to begin US manufacturing. Whilst Foxconn is conducting the research, it is also not known what will the ruling will be on its practicality. The report notes that Foxconn’s chairman is not very enthusiastic about the idea of moving Apple’s manufacturing line away from China.
From Apple’s perspective, it seems unlikely that the company would move iPhone production to America without a financial reason to do so. If the Trump administration decides to heavily tax company imports, it may end up being cheaper for Apple to manufacture in the US and absorb the higher production costs.
As it stands today, Apple assembles almost everything it sells in China; iPhones, iPads and Macs. The exception is the low-volume specialist (and expensive) Mac Pro which Apple makes in a US factory. In the past, Apple CEO Tim Cook has dismissed the possibility of making iPhones in the US due to a ‘brain drain’ of vocational talent and knowledge in the American workforce. A supplier report from yesterday reaffirmed this position, saying that Donald Trump’s insistence to make iPhones in the United States is simply impossible.