Why Apple doesn't make iPhones in America – and probably won't

Egypt Independent

3 days ago

CNN — In 2011, then-President Barack Obama pressed Apple CEO Steve Jobs on what it would take to bring iPhone production to the United States, according to
In 2011, then-President Barack Obama pressed Apple CEO Steve Jobs on what it would take to bring iPhone production to the United States, according to The New York Times
Fourteen years later, President Donald Trump is resurfacing that question to current Apple CEO Tim Cook – and the stakes are a lot higher. Trump threatened a hefty 25 percent tariff against Apple and other smartphone companies unless they manufacture phones sold in the US stateside.
'I have long ago informed Tim Cook of Apple that I expect their iPhone's that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,' Trump posted on Truth Social on Friday. 'If that is not the case, a Tariff of at least 25 percent must be paid by Apple to the U.S.'
Earlier this month, Apple CEO Tim Cook said he expected the majority of US-bound iPhones to be shipped from India.
Reviving US manufacturing has been a tentpole goal of Trump's presidency. Within the first three months of his second term, he went on a tariff blitz, promising to impose levies on nearly every product made abroad in an effort to boost jobs in the US and rebalance what he saw as unfair practices by America's trading partners.
But experts who spoke with CNN said making iPhones in the United States would upend the way Apple builds its most lucrative product. Moving iPhone production to the US would mean shifting away from countries like China and India that have the highly specialized workforce and skills needed to produce the millions of iPhones that Apple ships each year. The result could mean price hikes or design changes for the iPhone, some analysts estimate.
'It just fundamentally doesn't work,' said Dipanjan Chatterjee, vice president and principal analyst at market research firm Forrester.
Apple did not respond to CNN's request for comment on whether it plans to shift iPhone production to the US.
China already has a sprawling system of plants tailored specifically for assembling electronics. Foxconn, Apple's longtime iPhone assembly partner, employs 900,000 people in its peak season, although it's unclear how much of that employment occurs in China and is related to iPhone work. Workers live in dormitories, making it easier to shift production plans with little notice, as Chatterjee points out. Production processes are highly specialized depending on the product; it's not a 'one size fits all' approach that's easy to replicate.
'The expertise to make each of the components is something that has to be worked on for a long period of time,' said David Marcotte, senior vice president at international market research company Kantar.
There's also the question of whether there's enough demand for factory jobs in America. Manufacturing has been on the decline in the United States, with only 8 percent of American workers holding jobs in that sector as of earlier this year compared to roughly 26 percent in 1970, according to the Bureau of Labor Statistics,
And a lot has changed since 1970.
Carolyn Lee, executive director of the Manufacturing Institute, previously told CNN that 'the job has very much changed' and that modern manufacturing roles involve skills like coding and data analytics.
Apple said in February that it plans to invest $500 billion in growing its US footprint over the next four years, which will go towards boosting its research and development efforts, opening a new facility to manufacture servers to support its Apple Intelligence software features and launching a Detroit academy to teach companies about smart manufacturing techniques and AI. Trump has declared this investment – along with a $100 billion commitment from Taiwan-based chipmaker TSMC to expand in the US – a political win and a step towards onshoring more tech production.
But Apple's academy will be for small-to medium-sized businesses, according to Apple's press release, not training workers or building infrastructure to produce iPhones the way it is done in China or India.
Cook has acknowledged the gap in labor required to produce iPhones in the US. Speaking at a Fortune Magazine event in 2017, he described the manufacturing environment in China as providing a combination of 'craftsman' skills, 'sophisticated robotics' and 'the computer science world.'
'That intersection, which is very rare to find anywhere, that kind of skill, which is very important for our business because of the precision and quality level that we like,' he said.
Mohit Kumar, CEO and founder of smart ring maker Ultrahuman, has firsthand experience shifting production of a tech product to the US from India. Ultrahuman began producing its finger-worn health tracker in Texas in November after partnering with electronics manufacturer SVtronics. The smart ring company automated more tasks to avoid higher labor costs in the United States and hired workers that were trained in multiple steps of the process – such as casting and polishing rings – rather than just one of those steps, he told CNN.
The topic came up in April, with US Commerce Secretary Howard Lutnick telling CNBC that Cook said Apple needs 'robotic arms' to build iPhones in the United States at the same scale and precision as its facilities abroad.
Patrick Moorhead, founder and CEO of analysis firm Moor Insights & Strategy, thinks Apple could feasibly shift some iPhone production to the US in five years. But that would involve automating some processes to account for the skill gap in America compared to China and India, he says. That could also involve changing the iPhone's design to accommodate more automation, such as changing how certain components are glued together.
Many of Apple's suppliers are based in China, so transitioning to the US even just for assembly would mean shifting further away from critical components. Dan Ives, global head of technology research for Wedbush Securities, told CNN last month via email that an estimated 90 percent of the iPhone's production process takes place in China, although he says that number is closer to 40 percent now that Apple has shifted more production to India. He has also estimated that making iPhones in the United States could triple the price of the device.
Apple is faced with a tough decision either way, says Forrester's Chatterjee, despite Cook's meeting with Trump last week and the $1 million donation he made to Trump's inauguration, according to Axios.
'Because neither can you realistically, from an economic standpoint, bring production to the US, nor is it really tenable in this climate to say, 'No, I won't do that,'' he said. 'So you've got to walk that fine line, that tightrope, for as long as you can.'