The election of Donald Trump as president of the USA put the Apple company on alert, so that it is now in discussions with Foxconn to see if future iPhones can be manufactured in the USA. Apple talked to both Foxconn and Pegatron about this change, both companies assembling iPhone terminals or iPad tablets for those from Apple.
Until now, the president of Foxconn, Terry Gou, has not been very enthusiastic about the idea because it would imply a substantial increase in production costs. Foxconn should pay its American employees with amounts 10 times higher than those paid in China, and from here you can imagine that the production cost of the iPhone will increase accordingly.
Those from Foxconn still offered a series of costs regarding the production of iPhone terminals in the USA, but Pegatron refused to offer any production plan due to the very high costs. The discussions came after Donald Trump was elected president of the USA, he threatened Apple with the obligation to produce its iPhones in the USA and the imposition of a 45% tax on products imported from China.
The president of Apple, Tim Cook, said that the iPhone cannot be manufactured in the US because there are no factories equipped for such a thing, implying that in the US there would be no workforce with experience in such assembly techniques. Of course, in the middle it is partly about money and partly about logistics and staffing problems.
"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. China put an enormous focus on manufacturing. In what we would call, you and I would call vocational kind of skills. The US, over time, began to stop having as many vocational kinds of skills. I mean, you can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields."
Apart from the lack of factories and labor force, the suppliers of components for iPhone manufacturing are very far from the USA, and Apple should spend money including bringing them to the country. Finally, it is extremely unlikely that any iPhone will be manufactured in the USA, and that Donald Trump will impose any tax on imported products.
"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% 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"
