5 ms·

I feel like getting to 30% of the value would be a stretch if the ICs, PCB assembly, and possibly screen are coming from China and Taiwan/TSMC. Like, the case a

I feel like getting to 30% of the value would be a stretch if the ICs, PCB assembly, and possibly screen are coming from China and Taiwan/TSMC. Like, the case and battery are worth something, but not tons.

londons_explore 7y ago
It's pretty easy to value custom built components whatever you like. They are either very cheap components, but you paid a massive r&d grant to have them designed for you, or they are very expensive components but you paid no r&d costs. Choose whatever suits to best avoid taxes, quotas, fees, and regulations...
- formercoder 7y ago
  The magic of GAAP
- khuey 7y ago
  For extra points make different choices in different tax jurisdictions.
- mikepurvis 7y ago
  I guess that's true. If you're not actually selling them other than in your device, you can argue that they're basically worthless as bits of plastic and metal, and all the "value" is being created by the India-based assembly process that turns them from parts into functioning phones.
  - fastball 7y ago
    Not if you're paying X to produce these parts. You can't say "this part is only worth $10" if it's costing you $100 to produce.
    - mikepurvis 7y ago
      Does it actually cost $100 to produce an IC, though? Like, the manufacture of the device itself is relatively cheap, especially in volume— all the cost is R&D, test harnesses, simulation, license fees, etc.
- ksec 7y ago
  That is not entirely true, you cant just name an R&D budget, you have to show it in some way.
  - amdavidson 7y ago
    It is super true if you are using outside resources for R&D/NREC. Line item on the PO or wrap it into the part costs.
    - ksec 7y ago
      Is this specifically US? Surely you cant warp, say PCB that normally cost 20 cents on the upper bound and average of 10 cents, and say it now cost $20, because you are amortise $2 Billion of R&D over the 100M unit? You could definitely hide a lot of R&D within some form of limit, but it isn't a free pass for everything. At least from what I knew in the old UK's standard. There is a new what's labeled as UK's GAAP which I have no idea about.
- barry-cotter 7y ago
  > It's pretty easy to value custom built components whatever you like. Not if you’ve valued them very differently before in different tax jurisdictions. There’s definitely a certain degree of freedom in how the components of a finished product are valued when they have no, or very limited, alternative uses, but you can’t just pick a number arbitrarily out of a hat. Companies have to do internal cost accounting to figure out whether manufacturing a component to a certain quality, or in a certain place makes sense, and while there may not be exact equivalents on the open market there will be close ones in most cases. Worst comes to worst you can see how much an order of size X would cost from a manufacturer capable of producing the component. There are many degrees of freedom in transfer pricing but they’re finite.

londons_explore 7y ago

It's pretty easy to value custom built components whatever you like. They are either very cheap components, but you paid a massive r&d grant to have them designed for you, or they are very expensive components but you paid no r&d costs. Choose whatever suits to best avoid taxes, quotas, fees, and regulations...

formercoder 7y ago
The magic of GAAP
khuey 7y ago
For extra points make different choices in different tax jurisdictions.
mikepurvis 7y ago
I guess that's true. If you're not actually selling them other than in your device, you can argue that they're basically worthless as bits of plastic and metal, and all the "value" is being created by the India-based assembly process that turns them from parts into functioning phones.
- fastball 7y ago
  Not if you're paying X to produce these parts. You can't say "this part is only worth $10" if it's costing you $100 to produce.
  - mikepurvis 7y ago
    Does it actually cost $100 to produce an IC, though? Like, the manufacture of the device itself is relatively cheap, especially in volume— all the cost is R&D, test harnesses, simulation, license fees, etc.
ksec 7y ago
That is not entirely true, you cant just name an R&D budget, you have to show it in some way.
- amdavidson 7y ago
  It is super true if you are using outside resources for R&D/NREC. Line item on the PO or wrap it into the part costs.
  - ksec 7y ago
    Is this specifically US? Surely you cant warp, say PCB that normally cost 20 cents on the upper bound and average of 10 cents, and say it now cost $20, because you are amortise $2 Billion of R&D over the 100M unit? You could definitely hide a lot of R&D within some form of limit, but it isn't a free pass for everything. At least from what I knew in the old UK's standard. There is a new what's labeled as UK's GAAP which I have no idea about.
barry-cotter 7y ago
> It's pretty easy to value custom built components whatever you like. Not if you’ve valued them very differently before in different tax jurisdictions. There’s definitely a certain degree of freedom in how the components of a finished product are valued when they have no, or very limited, alternative uses, but you can’t just pick a number arbitrarily out of a hat. Companies have to do internal cost accounting to figure out whether manufacturing a component to a certain quality, or in a certain place makes sense, and while there may not be exact equivalents on the open market there will be close ones in most cases. Worst comes to worst you can see how much an order of size X would cost from a manufacturer capable of producing the component. There are many degrees of freedom in transfer pricing but they’re finite.