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For US President Donald Trump, few accomplishments would surpass the acquisition of an iPhone which is one of the most sought out technological gadgets in his country as it would be both an industrial and monetary boon. This would singlehandedly reinforce the tariff plans as well as the blueprint of his electoral policies which purportedly focused on restoration of manufacturing employment to the US.
It does seem within reach, particularly with the 145% tariffs they plan to levy on Chinese imports, the current base of manufacturing for Apple Inc. These companies have also pledged to spend $500 billion over the next four years within the country.
The oval office made it clear that Apple needs to manufacture the equipment in America. “If Apple didn’t think the United States could do it, they probably wouldn’t have put up that big chunk of change,” Said White House spokesperson Karoline Leavitt.
But in reality, things are not the same. For a variety of reasons, including the lack of infrastructure and available labor needed to manufacture the devices, Apple is not expected to shift iPhone production to the United States anytime soon. Additionally, the country does not have the sophisticated ecosystem of supply chains and manufacturing and engineering capability — at least for now — which is available in Asia.
The company has also shifted its focus towards turning India into its next frontier for iPhones headed to the US. To decrease dependency on China, Apple’s partners are constructing the second largest iPhone factory in India.
Apple’s biggest FATP — which stands for final assembly, test and pack-out — facilities and, to many people outside of Asia, incomprehensible. They are almost towns themselves, with several hundred thousand people, schools, gyms, medical facilities, and dormitories. One of the iPhone factories, situated in Zhengzhou and an entire complex, has even been dubbed iPhone City.
“What city in America is going to put everything down and build only iPhones? Because there are millions of people employed by the Apple supply chain in China,” said Matthew Moore, the co-founder of a startup and a former Apple manufacturing engineer. “Boston is over 500,000 people. The whole city would need to stop everything and start assembling iPhones.”
An Apple spokesperson from Cupertino, California, did not accept any comments.
The new iPhones and other products are still designed at Apple labs in Sillicon Valley, but the heavy interaction with Asia involves most of the suppliers at the very beginning of the development stage. All earlier interactions commence long before a product is ready to be marketed. The Apple engineers and operations specialists spend months or years collaborating with Foxconn Technology Group and Pegatron Corp. Apple’s many suppliers are relentlessly consulted to tailor the modular construction of the new devices.
In addition to its lock on the manufacturing operations, China is home to millions of people educated in operating machinery and the skills needed to build iPhones – a process that still requires a lot of manual work.
“The engineering support to run a factory is not in America,” Moore said.
Tim Cook recalled Apple’s reliance on China during a Fortune magazine event in 2017 and claimed it was due to the skill and quantity of skilled workers, and not low labor costs.
“China stopped being the low labor cost country many years ago,” he said. “The reason is because of the skill and the quantity of skill in one location.”
Cook claimed, “You could fill multiple football fields with state-of-the-art tooling engineers in China”, while adding, “In the US, you could have a meeting of tooling engineers and I’m not sure we could fill the room.”
One popular counterargument is that the company should expend part of its cash reserves to purchase thousands of acres of land in the US to build an entirely robotic and automated iPhone assembly facility. That would eliminate any complications pertaining to human beings.
In a CBS interview, Commerce Secretary Howard Lutnick proposed the idea of “the army of millions and millions of human beings” being automated.
Supply chain experts and other professionals with experience in Apple product manufacturing deem these ideas unrealistic at the moment, citing cheaper access to automation in China as the reason.
They said that the pace of iPhone development makes process automation more difficult because it is subject to constant changes. Additionally, most of the equipment required for production is manufactured in China.
As iPhones have long retained their enduring aesthetic, the company has to change the overseas production assembly lines due to new materials, internal components, and even the slightest design modifications.
"A person familiar with Apple’s supply chain, who requested anonymity, said, “You design the thing, rebuild the factory, and you have six months to sell it,” highlighting the company’s relentless timelines." “The speed at which changes happen significantly complicates automation.”
While Apple has reduced the iPhones produced in China to less than 90% and diversified production to other countries, it is nearly impossible to replicate the process elsewhere. The company's production centers in Thailand, Vietnam, Malaysia, and Indonesia are focused on manufacturing Macs, AirPods, smartwatches, and iPads.
India has so far spearheaded efforts to build an iPhone manufacturing center outside China, but it’s taken a decade to materialize. Apple does operate a small iPhone assembly line in Brazil, but it focuses on older models.
For the time being, the Indian factories will assist Apple in circumventing the Chinese tariffs. Bloomberg News reported earlier that the company was already scope-filling its US channels, its largest single market, with iPhones produced in India. That country could also be enough, at least for now. The estimated 35 million units it’s currently making a year could satisfy a large proportion of its needs in the US.
Currently, the company sells more than 220 million iPhones annually, which includes seven models, each available in several colors and different storage options, all of which adds to the complexity of the entire process and increases the need for China’s scale supply.
Moore suggests simpler products with less frequent updates like iMacs and iPads could be less challenging. Apple does handle final assembly of Mac Pro desktops in Texas, but the put-together parts are still mostly manufactured in China. Not to mention, Apple only sells thousands of those computers each year and doesn't refresh them for years at a time.
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