Apple May Move iPhone Production to US
According to a report in Nikkei Asian Review, Apple Inc. (NASDAQ: AAPL) could do what has been unthinkable, which is to move some iPhone production to the United States. Most experts have argued that assembly line production will continue to move to Asia due to the costs of American labor.
The newspaper reports:
iPhones might one day soon carry “Made in America” labels.
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.”
However, the report also acknowledged the labor cost problem:
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.
So, it is not quite clear what the goal would be to move production to the United States. One theory might be to counter Donald Trump’s threat to put tariffs and products like the iPhone, if it continues to be made overseas. Another one, more far-fetched, is that Apple could press Foxconn to add U.S. jobs as leverage to keep its cash overseas — a trade of adding manufacturing jobs for possible financial punishment. However, that argument is a stretch.
No matter what the reason, the entire story seems odd.