4 ms·

My understanding (at least with the iPhone) was that assembly/test is <2% of the cost, so doubling or even tripling that component isn't that significant. It's

My understanding (at least with the iPhone) was that assembly/test is <2% of the cost, so doubling or even tripling that component isn't that significant. It's the supply chain that also needs to be aligned.

LeifCarrotson 7y ago
The "raw materials" used in that cost estimate from Foxconn are things like Samsung displays made in Korea, but also Apple SoCs and Qualcomm modems made at TSMC in Taiwan, and memory, power management, RF, cameras, etc. etc. etc. made in China. The time for Foxconn to assemble those modules, but an "Assembled in the US from parts made in China" iPhone would have the same difficulties. If you add the time to build the subcomponents and their support overhead it would cost much more. Also, the iPhone has a uniquely large margin and non-recoverable engineering costs, and the semiconductor and PCB industry is necessarily highly automated. The average bit of consumer goods has a larger assembly ratio. For what an anecdote is worth (to give a sense of the scale of the problem) I'm involved in automotive tier 2 industrial automation in the midwestern US. One of my customers who has plants in several countries has told me that a fully loaded hour (including benefits, taxes, etc) of assembly operator time in Michigan costs $28, the same hour in China costs $7.50, and the same hour in Mexico costs $4.75. It is a bit more of a pain to maintain qualified engineering and maintenance parity across these different zones, but they basically do the automation in Michigan and mirror those known-good machines and processes overseas with remote support. They're assembling, staking, polishing and inspecting plastic interior components, and their costs are roughly 15% overhead and profit, 20% shipping, 20% raw materials, 10% capital (machine) depreciation, and 35% operator time.

LeifCarrotson 7y ago

The "raw materials" used in that cost estimate from Foxconn are things like Samsung displays made in Korea, but also Apple SoCs and Qualcomm modems made at TSMC in Taiwan, and memory, power management, RF, cameras, etc. etc. etc. made in China. The time for Foxconn to assemble those modules, but an "Assembled in the US from parts made in China" iPhone would have the same difficulties. If you add the time to build the subcomponents and their support overhead it would cost much more. Also, the iPhone has a uniquely large margin and non-recoverable engineering costs, and the semiconductor and PCB industry is necessarily highly automated. The average bit of consumer goods has a larger assembly ratio. For what an anecdote is worth (to give a sense of the scale of the problem) I'm involved in automotive tier 2 industrial automation in the midwestern US. One of my customers who has plants in several countries has told me that a fully loaded hour (including benefits, taxes, etc) of assembly operator time in Michigan costs $28, the same hour in China costs $7.50, and the same hour in Mexico costs $4.75. It is a bit more of a pain to maintain qualified engineering and maintenance parity across these different zones, but they basically do the automation in Michigan and mirror those known-good machines and processes overseas with remote support. They're assembling, staking, polishing and inspecting plastic interior components, and their costs are roughly 15% overhead and profit, 20% shipping, 20% raw materials, 10% capital (machine) depreciation, and 35% operator time.