Apple is reportedly studying possibilities of moving iPhone production from China to the US. A new report by Japanese publication Nikkei Asian Review, which has had an excellent track record with Apple leaks, claims that the Cupertino-based company has asked two of its major manufacturers – Foxconn and Pegatron – to explore plans to move manufacturing to the US.
Apple’s move to studying the ideas to change its manufacturing base to the US is inspired by President-elect Donald Trump’s previous pledge where he claimed that America-based companies will be pushed to manufacture at home instead of other countries.
In its report, Nikkei Asian Review cites a person familiar with the matter as saying, “Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the US. Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.”
On manufacturing the iPhones in the US, Apple’s CEO Tim Cook had previously told CBS’ 60 Minutes program that “America simply did not have enough skilled workers for the production of iPhones.” Several Apple devices sport the ‘designed in California’ tag at the rear though the products are mostly made in China.
Nikkei also quotes an industry executive familiar with the iPhone production process who also claimed that it would be difficult to produce the iPhones in large quantities in the US.
“To make iPhones, there will need to be a cluster of suppliers in the same place, which the US does not have at the moment. Even if Trump imposes a 45 percent tariff, it is still possible that manufacturers will decide to continue production overseas as long as the costs together with the tariffs are lower than the amount they need to spend on building and running production lines in the US,” executive told Nikkei.
Another industry source told Nikkei, “It is not easy to make iPhones in America, unless the US government subsidises local companies for producing domestically.”
Some of the third-party suppliers that are major suppliers for Apple’s iPhones include TSMC (Taiwan Semiconductor Manufacturing Co) which supplies chips for iPhones; Japan Display and Sharp supplies panels for iPhones, and SK Hynix and Toshiba supply memory chips for iPhones.
Out of several suppliers, Sharp has been one of the companies that is ready to move manufacturing to the US while TSMC has been “clear that it would be much more expensive to make chips outside of Taiwan,” according to Nikkei.
At this moment, it isn’t clear whether Apple has made its mind to start manufacturing in the US though if this turns out to be true then we might see increase in iPhone prices in future.