Why Apple Can't Manufacture iPhones in the U.S.

• Manufacturing iPhones in the U.S. is complicated due to a global supply network and the decades required to create similar conditions as in China.
• The high cost of labor in the U.S. and automation of processes do not provide significant economic benefits, raising doubts about the feasibility of relocating production.
• Apple plans to increase production in India, as this will reduce risks associated with dependence on China.

This is reported by RBC Ukraine, ZDNet.

Manufacturing iPhones in the U.S. remains a popular topic in political circles, but the reality tells a different story. According to The Financial Times, the problem is not just logistical but also involves decades needed to recreate manufacturing conditions similar to those in China.

Modern iPhone models consist of approximately 2,700 components, produced across more than 700 factories worldwide. Only 30 of Apple's suppliers operate entirely outside of China.

The most efficient part of the manufacturing process is concentrated in China, where companies are located close to each other and can quickly respond to each other's needs. Creating such an ecosystem took decades.

Some components are indeed manufactured in the U.S., such as display protective glass and Face ID lasers. However, even in these cases, their contribution is partial: other display elements, like touch layers and backlighting, are produced in South Korea and assembled in China.

Experts from the Massachusetts Institute of Technology believe that relocating iPhone assembly to the U.S. will not have a significant economic impact. Most of the process will be automated, which will not create new jobs in the U.S., one of the main political goals.

The American system, which can change completely every four years, does not encourage investment in business. People and companies need a long-term perspective to make investments, notes a professor of information systems at Santa Clara.

Thus, despite ongoing calls, starting from Donald Trump in 2016, the production of iPhones in the U.S. remains unlikely, and Apple continues to rely on China.

Supply and Assembly Complexity

The iPhone consists of about 2,700 parts supplied by 187 suppliers from 28 countries. The majority of components come from China and Japan, as the proximity of suppliers to the assembly location reduces costs.

However, it's not just about the components. For example, the aluminum frame of the iPhone is made using high-tech machines that are currently only available in China.

Additionally, rare metals necessary for many components are also predominantly sourced from China, complicating the realization of the "Made in America" idea. Export restrictions on these metals only add to the difficulties.

Even if Apple can resolve all supply issues, the question of assembly remains. Assembling iPhones is a labor-intensive process, requiring a large workforce, the cost of which in the U.S. is significantly higher than in China.

Factories like Foxconn typically hire tens of thousands of additional workers during the launch of a new iPhone and then lay them off. Such practices cannot be implemented in the U.S. on the same scale.

Even if Apple invests in such a factory in the U.S., it is worth noting that wages in China start at about $214 per month, while in the U.S. they are around $3,500.

These are the scales necessary to maintain iPhone prices. Any changes will lead to price increases, and consumers will not be ready to accept such changes.

Currently, Apple plans to shift more production from China to India, where approximately 16% of iPhones are already assembled, and this figure is expected to rise to 20% this year.

Tags: USA/China