As US President Donald Trump pushes hard for goods to be “made in America,” how realistic is it to expect Apple Inc to stop manufacturing its iconic devices in China?
The freshly installed president vowed while campaigning that he would force Apple to bring production to US soil.
Yet, as other big companies have sought to appease the new administration with promises of jobs or investments in the US, Apple has stayed low-profile.
Photo: Bloomberg
Major Apple contractor Hon Hai Precision Industry Co (鴻海精密) this month confirmed that it is considering a US$7 billion investment to make flat panels in the US in a joint project with Japan’s Softbank Group Corp. The Taiwanese firm has given no details, and Apple declined to comment.
Global Equities Research analyst Trip Chowdhry said that moving manufacturing to the US, where many customers are, was more of a common-sense move than a political one.
“You need to manufacture local products in local markets,” Chowdhry said.
Making things locally gives better control of distribution networks and lets manufacturers customize goods for local markets, he added.
Whether politically motivated or not, Apple is not in the same position as automakers which relocated US factories overseas to cut costs, according to IHS manufacturing processes chief analyst Dan Panzica. Apple never moved jobs offshore, it created them there.
“The Apple jobs were never here,” Panzica said. “The entire supply chain grew in China.”
Apple benefits in Asia from a network that goes beyond subcontractors assembling smartphones, tablets or laptops. The California-based firm relies on a dense ecosystem of companies that make components and spare parts for its devices as well.
China also offers sources of important raw materials, along with cheap, flexible and abundant labor to keep iPhone assembly lines cranking along.
It would be “very hard to replicate” that situation with US workers without using “more robotics and less workforce,” undermining the political aim of creating jobs there, according to Endpoint Technologies Associates Inc analyst Roger Kay.
Exacerbating the challenge, “it makes no sense to make phones here if you have to ship all the components from China,” said technology analyst Jack Gold of J. Gold Associates LLC.
The MIT Technology Review in June last year considered several scenarios, from simply bringing assembly to the US to simultaneously shifting the manufacture of parts here.
The Review estimated the extra manufacturing cost of an iPhone 6S Plus at US$30 to US$100 as a result of those moves.
It is difficult to imagine that Apple would risk its status as the world’s most profitable company to absorb such a hike in manufacturing costs.
“Apple will never lower its margins on its flagship product, the iPhone,” Ovum Ltd consumer technologies analyst Ronan de Renesse said.
Apple is under pressure from investors to keep its high margins, and already faces slowing growth of iPhone sales.
So, would US consumers put their money where the political talk is and pay more for iPhones stamped “Made in the USA”?
Not all analysts were convinced.
It was seen as more likely that Apple would make a symbolic move to appease Washington, such as investing more in making Mac Pro computers here, or in a facility for higher-priced, limited-edition devices such as an “anniversary edition iPhone” to mark the handset’s 10th birthday this year.
“I would be very surprised to see a major production shift to the US,” Gold said while discussing Apple.
Breaking the US technology star’s successful business model should be out of the question for the Trump administration, and there is likely to be a compromise such as “financial incentives,” according to De Renesse.
Hon Hai, known as Foxconn Technology Group (富士康) outside Taiwan, is already trying to get US states to woo it with grants of land, cheap energy or tax breaks.
Apple could seek tax amnesty for the US$200 billion or so in profits it keeps overseas in exchange for increasing local manufacturing.
The economic equation would change if Trump went on the offensive by imposing heavy customs duties on Chinese imports.
Given Apple’s dependencies on partners in China, and its keen desire to gain traction in that market, Apple could find itself an early casualty in a US trade battle with Beijing.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”