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I was curious to compare Apple's revenues from China with the payments it sends to China for manufacturing. Revenues (official data): ~$50B/year, down from $80

by _cs2017_ 7y ago

I was curious to compare Apple's revenues from China with the payments it sends to China for manufacturing. Revenues (official data): ~$50B/year, down from $80B/year a year ago. Costs attributed to China are very hard to measure. A lot of the official "manufacturing cost" of the iPhone doesn't actually stay in China (as chips, screens, etc. are all manufactured outside of China, and simply assembled there: https://www.bloomberg.com/opinion/articles/2019-06-12/apple-s-iphones-are-already-made-in-u-s-not-china https://www.bloomberg.com/opinion/articles/2019-06-12/apple-...). According to one source (https://theconversation.com/we-estimate-china-only-makes-8-46-from-an-iphone-and-thats-why-trumps-trade-war-is-futile-99258 https://theconversation.com/we-estimate-china-only-makes-8-4...), about ~$8-9/phone stays in China. Also, Apple makes ~200M iPhones a year (not all of them in China, but let's ignore that). Assuming my numbers are not too far off, Apple contributes ~200M x $10, or just ~$2B to the Chinese economy by manufacturing the iPhones there. It seems that if China restricts (or even merely discourages) people from buying Apple products, it will hurt Apple a lot more than Apple could ever hurt China. Of course, China cannot do anything to Apple without US retaliating. But as the trade conflict escalates, this threat loses its power as there are fewer things to retaliate with.

baybal2 7y ago
> Of course, China cannot do anything to Apple without US retaliating. But as the trade conflict escalates, this threat loses its power as there are fewer things to retaliate with. It did, and not so few times. There was a case in 2015 when some low level customs bureaucrat made Apple C-levels loose sleep for close to a month when he arrested the whole new model iphone shipment just before the holiday season on grounds of them either having a typo in the declaration, or something equally silly
writepub 7y ago
Your $2B number is way off. While most chips are manufactured outside China, most chip packaging happens within. So, all the costs post mass chip production (into cut silicon dies), including chip packaging, testing, PCB manufacture, assembly, etc happens in China. You're off by at least 5X, $50/iPhone is the money paid to Chinese vendors, or at least $10B. Considering the 3X labor buying power compated to the US, $10B/annum is directly supporting the livelihood of plenty in China. The indirect benefit of training a workforce in cutting edge high tech manufacturing, and R&D, is possibly much higher. So high in fact that Huawei, Xiaomi and Oppo combined probably outsell Apple and Samsung combined
- _cs2017_ 7y ago
  Ah thanks, I wish I had better sources, the one I quoted was all I could find. Yeah at $10B/year, the tables are turned I think. Strictly speaking, it's still a lot less than the money paid by the Chinese citizens to Apple. But that's not a fair comparison, since it's not like the Beijing government can just take that money and use it to pay salaries to some workers. I suppose they could, over time, guide domestic consumption towards more domestic goods, but it's a slow and uncertain process.
gingabriska 7y ago
But let's not forget how many people they lifted out of poverty with that $2B. It is being used to install infrastructure in china, education/health services have vastly improved compared to Apple who still likes to keep their money in bank, helped no American's life joyful.
ksec 7y ago
>Of course, China cannot do anything to Apple without US retaliating. Not really the main reason. Apple has an extremely good relationship with China, and has been helping them from NAND, Glass, Battery, Display, Plastic, to every other form of components up to speed and quality.
- mfatica 7y ago
  And to thank them they turn around and release huawei phones

baybal2 7y ago

> Of course, China cannot do anything to Apple without US retaliating. But as the trade conflict escalates, this threat loses its power as there are fewer things to retaliate with. It did, and not so few times. There was a case in 2015 when some low level customs bureaucrat made Apple C-levels loose sleep for close to a month when he arrested the whole new model iphone shipment just before the holiday season on grounds of them either having a typo in the declaration, or something equally silly

writepub 7y ago

Your $2B number is way off. While most chips are manufactured outside China, most chip packaging happens within. So, all the costs post mass chip production (into cut silicon dies), including chip packaging, testing, PCB manufacture, assembly, etc happens in China. You're off by at least 5X, $50/iPhone is the money paid to Chinese vendors, or at least $10B. Considering the 3X labor buying power compated to the US, $10B/annum is directly supporting the livelihood of plenty in China. The indirect benefit of training a workforce in cutting edge high tech manufacturing, and R&D, is possibly much higher. So high in fact that Huawei, Xiaomi and Oppo combined probably outsell Apple and Samsung combined

_cs2017_ 7y ago
Ah thanks, I wish I had better sources, the one I quoted was all I could find. Yeah at $10B/year, the tables are turned I think. Strictly speaking, it's still a lot less than the money paid by the Chinese citizens to Apple. But that's not a fair comparison, since it's not like the Beijing government can just take that money and use it to pay salaries to some workers. I suppose they could, over time, guide domestic consumption towards more domestic goods, but it's a slow and uncertain process.

gingabriska 7y ago

But let's not forget how many people they lifted out of poverty with that $2B. It is being used to install infrastructure in china, education/health services have vastly improved compared to Apple who still likes to keep their money in bank, helped no American's life joyful.

ksec 7y ago

>Of course, China cannot do anything to Apple without US retaliating. Not really the main reason. Apple has an extremely good relationship with China, and has been helping them from NAND, Glass, Battery, Display, Plastic, to every other form of components up to speed and quality.

mfatica 7y ago
And to thank them they turn around and release huawei phones