Manufacture This

The blog of the Alliance for American Manufacturing

Foxconn hasn't shared details about the plans, however.

Are we getting closer to an American-made iPhone?

Foxconn, the electronics manufacturer that makes Apple’s iPhone, confirmed Wednesday that it is looking at expanding its operations in the United States. The company, which has invested in a number of high-tech sectors, did not provide any specifics, beyond noting that it is “in preliminary discussions regarding a potential investment.”

But the news immediately had folks talking about the feasibility of bringing the production of the iPhone to the United States — especially since there are rumors that Foxconn is already considering it.

An American-made iPhone is something that President-elect Donald Trump has repeatedly said he wants to see happen. Sen. Bernie Sanders (D-Vt.) — who disagrees with Trump on many, many things — also has said he would like to see Apple manufacture more of its products in the United States.

Of course, here at the Alliance for American Manufacturing, we too would love to see Apple move operations from overseas back to the United States. It would be tough to do, but it is feasible.

The biggest hurdle might just be convincing Apple to do it.

Right now, Apple manufacturers most of its products in Asia, and China is the hub. Industry analysts long have said moving production to the U.S. would be difficult, citing higher labor costs and supply chain issues.

But perhaps more importantly, Apple CEO Tim Cook has repeatedly thrown cold water on the idea of bringing production back to the United States. He told 60 Minutes in a 2015 interview that Apple manufacturers in China because workers have better vocational training than in the United States.

That is a bunch of malarkey. As AAM’s own Scott Paul wrote in a piece for The Huffington Post, Apple actually manufactures in China because it can exploit cheap labor and avoid more stringent environmental regulation — and it is the only way Apple can sell its products in China. Here’s more:

“Apple doesn’t make iPhones in the United States because the company is too heavily invested in its outdated production model in China. The truth is, if Apple reinvested a fraction of its market capitalization in reinvigorating U.S. high tech production, it would make a real difference, and it wouldn’t even raise the price of iPhones in a way that would harm sales.”

So what might that look like? The folks over at MIT Technology Review looked at three avenues iPhone production in the United States could take:

  • In scenario 1, much of the iPhone’s global supply chain would remain intact, but the phone itself would be assembled on U.S. soil. Adding in labor, transportation and logistics expenses, the average price of an iPhone would increase by about 5 percent.
  • In scenario 2, the iPhone and its components would be made in the United States. As of the time of the article’s publication, 346 of the Apple’s 766 suppliers were in China, while the rest were in Japan (126), the United States (69) and Taiwan (41). Moving all those suppliers to the U.S. would be a huge undertaking, but it is possible.
  • In scenario 3, the entire production would happen in the United States — including the raw materials. That includes things like rare earths, a difficult task considering 85 percent of the world’s supply is produced by China.  

So, it’s unlikely that scenario 3 will happen. But it’s also silly to think that Apple couldn’t realistically do more to increase its production in the United States, including assembling the iPhone and bringing some of the supply chain back. Apple employs 110,000 people around the world — and its suppliers like Foxconn employ an additional 1.6 million. Bringing just a fraction of those jobs back to the United States would make a difference.