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Apple could not make I Phones in the US. The cost of living is too high. Either you bring the cost of living down or you make technology incredibly more product

Apple could not make I Phones in the US. The cost of living is too high. Either you bring the cost of living down or you make technology incredibly more productive. Which in itself make the price of the product go down and generates less profits as a tendency. Think of the shareholders my man, what would they do without?

stjohnswarts 5y ago
At their current level of production? Nope, US doesn't have the capacity. Give it 3 or 4 years, probably, at an elevated cost.
actuator 5y ago
Apple has enough margins to make the phone in US. They make it outside to increase their profits.
- ramraj07 5y ago
  Which market research document did you get this factoid from? Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).
  - nwiswell 5y ago
    > Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. This is circular reasoning. We can't make them here because we don't. Yes, obviously it would take time to build capacity, but it's silly to argue China is fundamentally capable of something that the US is not. This is purely a question of cost (and, therefore, motivation). What should probably be countenanced, in my opinion, is "supply chain readiness": make _some_ of the iPhones domestically, so that if it becomes necessary, it is much faster to ramp domestic production. That hurts profits in the short term, but it probably does enhance long term expectation profits (conflict with China is less disastrous). Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics.
    - chii 5y ago
      The US can't make iphones the same way that China can't make their own Silicon Valley (god knows they've tried - they ended up with Shenzen, which to be fair, is called the Silicon Valley of electronics).
    - LordDragonfang 5y ago
      >Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics. While it may not originate from politicians, politics and corporate short-sightedness have been so tightly coupled since at least the Reagan admin that distinguishing the two is arguably missing the forest for the trees. But yes, the root problem is the people controlling the levers of Capital for short-sighted greed, as is often the case.
      - stjohnswarts 5y ago
        Crony capitalism and current US politics are deeply rooted into each other and feed and nourish one another.
        LordDragonfang 5y ago
        Blaming "crony" capitalism implies the issue is too much regulation, not too little. Since I'm asserting that most of the issues stem from the period of deregulation following Reagan, that's clearly at very different conclusion. Short-sighted pursuit of profit is a failure mode inherent in capitalism in general, no cronyism required.
    - nebula8804 5y ago
      We don't make iPhones but there is this smart phone being made here. https://puri.sm/products/librem-5-usa/ https://puri.sm/products/librem-5-usa/ It is like 1000$ more expensive than the China version of the same phone. Could Apple and their volume get their price down? Probably but it is still going to be significantly more expensive. If the US was desperate, we could maybe switch to this phone in an emergency?
  - actuator 5y ago
    Adding to what the other commenter said. A lot of electronics manufacturing is automated. US is costly because of mainly cost of human labour, but a lot of component design is anyway happening in countries outside China where human labour is not cheap. Reducing reliance on PRC doesn't mean, doing everything at home. Take the example of processor, it is ARM, a British design company's spec followed by Apple, a US company to design their chip, which is made by TSMC, a Taiwanese company with equipments from ASML, a dutch company.
  - dragonelite 5y ago
    It will probably take multiple build back better budgets to restructure US infrastructure and industrial base to get the ball rolling.
  - bumby 5y ago
    >It’s not apples mistake, it’s the governments. Can you elaborate? From my vantage point, the impetus of this was globalization and there are many hands in that pot. Consumers like cheap goods. Manufacturers like cheap labor. Governments enact policies that effect both. The result is an outsourcing of manufacturing over the last four decades. It's odd to me that you give a company a pass but seem to blame constituents and governments, exclusively.
    - deleted 5y ago
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    - jonas21 5y ago
      Governments make laws, and constituents vote to choose who is in the government. Companies can do neither. Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. Now what benefits might you get by manufacturing in the US? Certainly, it could be good for marketing. And consumers, particularly those at the high end, might be willing to pay more for a product manufactured here. Apple has, in fact, tried to do this. Remember when they made a big deal about moving manufacturing of the Mac Pro to Texas in 2019 [1]? Unfortunately, this hasn't worked out as well as they'd hoped due to the expertise and supply chain issues that others have mentioned [2]. [1] https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to-be-made-in-texas/#:~:text=%E2%80%9CWe%20believe%20deeply%20in%20the,going%20to%20continue%20growing%20here.%E2%80%9D https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to... [2] https://www.bloomberg.com/news/features/2021-02-09/this-is-how-tim-cook-transformed-apple-aapl-after-steve-jobs https://www.bloomberg.com/news/features/2021-02-09/this-is-h...
      - bumby 5y ago
        You're acting like laws are the only decisions that matter. Laws constrain business decisions, sure, but they don't dictate them. In some cases, they may constrain them enough to effectively dictate them (like the Buy American Act) but those are relatively rare. >Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. This gets to my earlier point. Voting at the ballot and voting with your wallet are both ways to evaluate what people value. Both individual consumers and businesses vote with their wallets. Have you never paid more for something because it better aligns with your value system? Or do you strictly make purchases solely on the input of price? I see many people on HN who refuse to buy Amazon Basic items precisely for this reason, even though they are often the cheapest option. As I previously said, American consumers largely value cheap shit. Companies largely value profits. Both of these, taken to an extreme, can come at the expense of other things like economic stability or strategic independence. The difference is, I hold all three (individuals, companies, and governments) accountable for those choices. It just seems weird to me that so many people are willing to hold a subset of them to task while giving the other subset a free pass. >Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. Let me reframe this. If I instead said, "Any politician who doesn't take millions of dollars from lobbyists will not be able to stay in office for long", would that make accepting of that money somehow justified in your mind? For most people the answer is no. The difference is we've been hoodwinked into thinking morally ambiguous or outright immoral behavior is somehow ok in one sphere while acknowledging a moral burden elsewhere. I'm not arguing that we can simply start making things in America on the drop of a dime. Anyone who has been involved in manufacturing knows that there is a lot of manufacturing expertise that has left and can only be done (at the current time, at least) overseas. What I'm poking at is that this is the logical progression of offshoring manufacturing over the last half-century. That strategy is due in part to corporate influence on laws, as well as the government who put those laws in place, as well as the constituents who put those civil servants in place. I'm old enough to remember Ross Perot's quip about the "giant sucking sound" from jobs (and expertise) being sucked out of the country and to witness firsthand the decline of the rust-belt. To act like corporations are blameless in the undermining of local manufacturing is naïve IMO.
  - brimble 5y ago
    > Which market research document did you get this factoid from? Tip of the hat for a rare correct use of the word "factoid".
- moonchrome 5y ago
  Where have you been for the last two years? If it was just a matter of margins we wouldn't have world wide shortages of components, production lines shutting down, etc. Even with massive multibilion investments in fabs all over the place it's going to take years to bring up fab capacity - in the ideal case. And that's just for one component. Apple doesn't even do manufacturing anyway - they outsource every step of the way. What US alternatives are there to Samsung displays or Foxconn assembly ? Apple is too high up the chain to bring about this kind of change, best you could probably do is US assembly if you imposed India like tariffs. Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
  - actuator 5y ago
    Systematic destruction of industrial capacity is not fixed in a single year. Even the outsourcing of capacity to PRC, didn't happen in a single year. It happened slowly motivated by margins, not due to some technical breakthroughs that were happening in PRC. > Apple doesn't even do manufacturing anyway - they outsource every step of the way. That's again a conscious choice because of margins. Apple used to manufacture stuff themselves in US. No one is saying Apple has to make display tech as well. Buying stuff from allies like SK, Japan and Taiwan shouldn't be an issue. > Not sure how the US consumers would feel about their iPhone jumping in price by 30%. Last I checked Apple had over 40% margins on their iPhone. If Apple shared the same concerns as their parent country, they wouldn't work to maximize their profits, even if it comes from labour working in inhumane conditions. The systematic destruction of US industrial capacity has been in chase of profits.
    - erosenbe0 5y ago
      I'd argue capacity was not 'outsourced' as American manufacturing never had the kind of capacity seen in Asia. Modern Asian manufacturing scales up faster than USA has ever done outside of WWII. Large numbers of infrastructure and people.
  - copperx 5y ago
    > Not sure how the US consumers would feel about their iPhone jumping in price by 30%. Apple sells iPhones in Mexico at 30% over the US price and you still see iPhones everywhere, even considering the purchasing power of the average Mexican is about 1/10 of an American.
- kwere 5y ago
  it would cost 100s billion $ of capex to "copy" eastern supplies and still fail commercially without tariffs on a quasi-global scale
eloff 5y ago
It's less about cost of living and more about the fact that all the expertise and parts all the way through the supply chain are in Asia. Bringing that industry to the US requires bringing many of the supporting industries too. It's no simple task and probably won't happen at this point.
- landemva 5y ago
  People expertise can be hired. That doesn't overcome the pollution allowances other countries have. It's cheaper and easier to pollute over there.
  - eloff 5y ago
    Is iPhone production very polluting? I don't think that factors into it very much really. More cost of labor, proximity to suppliers, and domain knowledge.
    - landemva 5y ago
      Chemical etching, perfluorocarbons, and massive water consumption is cheaper where pollution regulations are weak. Most of the lines are automated, so labor costs of a running line aren't the big cost issue. Environment and human health have few protections over there. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1566445/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1566445/
- shagie 5y ago
  ... and the logistics of getting those parts. Everything you need to build an iPhone is in one city. This is quite a bit like Detroit of the 50s - where the manufacturer and the entire supply chain for it is geographically compact. Today, it is hard to find a geographically compact industrial chain within the US. http://free.sourcemap.com/maps/57d154a89ca3b16d44e95e5e http://free.sourcemap.com/maps/57d154a89ca3b16d44e95e5e Compare that to, say, the supply chain for the Ford F150 - https://open.sourcemap.com/maps/582b47c785e240e442569015 https://open.sourcemap.com/maps/582b47c785e240e442569015
erichocean 5y ago
Apple has said they could build iPhones in the US, but the cost would be $7 more per iPhone (when they studied it years ago).
- morelisp 5y ago
  This is completely implausible. In 2016 final assembly alone was estimated to go from at least $10 to $30, ignoring fixed overhead and training. https://www.technologyreview.com/2016/06/09/159456/the-all-american-iphone/ https://www.technologyreview.com/2016/06/09/159456/the-all-a...
bin_bash 5y ago
Not according to Tim Cook: > There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is. https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-... Of course, he would say nice things about China like this so I take it with a grain of salt myself.

stjohnswarts 5y ago

At their current level of production? Nope, US doesn't have the capacity. Give it 3 or 4 years, probably, at an elevated cost.

actuator 5y ago

Apple has enough margins to make the phone in US. They make it outside to increase their profits.

ramraj07 5y ago
Which market research document did you get this factoid from? Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).
- nwiswell 5y ago
  > Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. This is circular reasoning. We can't make them here because we don't. Yes, obviously it would take time to build capacity, but it's silly to argue China is fundamentally capable of something that the US is not. This is purely a question of cost (and, therefore, motivation). What should probably be countenanced, in my opinion, is "supply chain readiness": make _some_ of the iPhones domestically, so that if it becomes necessary, it is much faster to ramp domestic production. That hurts profits in the short term, but it probably does enhance long term expectation profits (conflict with China is less disastrous). Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics.
  - chii 5y ago
    The US can't make iphones the same way that China can't make their own Silicon Valley (god knows they've tried - they ended up with Shenzen, which to be fair, is called the Silicon Valley of electronics).
  - LordDragonfang 5y ago
    >Unfortunately Wall Street is notorious for its emphasis on the short term -- and that has next to nothing to do with politics. While it may not originate from politicians, politics and corporate short-sightedness have been so tightly coupled since at least the Reagan admin that distinguishing the two is arguably missing the forest for the trees. But yes, the root problem is the people controlling the levers of Capital for short-sighted greed, as is often the case.
    - stjohnswarts 5y ago
      Crony capitalism and current US politics are deeply rooted into each other and feed and nourish one another.
      - LordDragonfang 5y ago
        Blaming "crony" capitalism implies the issue is too much regulation, not too little. Since I'm asserting that most of the issues stem from the period of deregulation following Reagan, that's clearly at very different conclusion. Short-sighted pursuit of profit is a failure mode inherent in capitalism in general, no cronyism required.
  - nebula8804 5y ago
    We don't make iPhones but there is this smart phone being made here. https://puri.sm/products/librem-5-usa/ https://puri.sm/products/librem-5-usa/ It is like 1000$ more expensive than the China version of the same phone. Could Apple and their volume get their price down? Probably but it is still going to be significantly more expensive. If the US was desperate, we could maybe switch to this phone in an emergency?
- actuator 5y ago
  Adding to what the other commenter said. A lot of electronics manufacturing is automated. US is costly because of mainly cost of human labour, but a lot of component design is anyway happening in countries outside China where human labour is not cheap. Reducing reliance on PRC doesn't mean, doing everything at home. Take the example of processor, it is ARM, a British design company's spec followed by Apple, a US company to design their chip, which is made by TSMC, a Taiwanese company with equipments from ASML, a dutch company.
- dragonelite 5y ago
  It will probably take multiple build back better budgets to restructure US infrastructure and industrial base to get the ball rolling.
- bumby 5y ago
  >It’s not apples mistake, it’s the governments. Can you elaborate? From my vantage point, the impetus of this was globalization and there are many hands in that pot. Consumers like cheap goods. Manufacturers like cheap labor. Governments enact policies that effect both. The result is an outsourcing of manufacturing over the last four decades. It's odd to me that you give a company a pass but seem to blame constituents and governments, exclusively.
  - deleted 5y ago
    [deleted]
  - deleted 5y ago
    [deleted]
  - jonas21 5y ago
    Governments make laws, and constituents vote to choose who is in the government. Companies can do neither. Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. Now what benefits might you get by manufacturing in the US? Certainly, it could be good for marketing. And consumers, particularly those at the high end, might be willing to pay more for a product manufactured here. Apple has, in fact, tried to do this. Remember when they made a big deal about moving manufacturing of the Mac Pro to Texas in 2019 [1]? Unfortunately, this hasn't worked out as well as they'd hoped due to the expertise and supply chain issues that others have mentioned [2]. [1] https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to-be-made-in-texas/#:~:text=%E2%80%9CWe%20believe%20deeply%20in%20the,going%20to%20continue%20growing%20here.%E2%80%9D https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to... [2] https://www.bloomberg.com/news/features/2021-02-09/this-is-how-tim-cook-transformed-apple-aapl-after-steve-jobs https://www.bloomberg.com/news/features/2021-02-09/this-is-h...
    - bumby 5y ago
      You're acting like laws are the only decisions that matter. Laws constrain business decisions, sure, but they don't dictate them. In some cases, they may constrain them enough to effectively dictate them (like the Buy American Act) but those are relatively rare. >Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. This gets to my earlier point. Voting at the ballot and voting with your wallet are both ways to evaluate what people value. Both individual consumers and businesses vote with their wallets. Have you never paid more for something because it better aligns with your value system? Or do you strictly make purchases solely on the input of price? I see many people on HN who refuse to buy Amazon Basic items precisely for this reason, even though they are often the cheapest option. As I previously said, American consumers largely value cheap shit. Companies largely value profits. Both of these, taken to an extreme, can come at the expense of other things like economic stability or strategic independence. The difference is, I hold all three (individuals, companies, and governments) accountable for those choices. It just seems weird to me that so many people are willing to hold a subset of them to task while giving the other subset a free pass. >Any company that takes on much higher costs than its competitors without getting some benefit in return will not be able to stay in business for long. Let me reframe this. If I instead said, "Any politician who doesn't take millions of dollars from lobbyists will not be able to stay in office for long", would that make accepting of that money somehow justified in your mind? For most people the answer is no. The difference is we've been hoodwinked into thinking morally ambiguous or outright immoral behavior is somehow ok in one sphere while acknowledging a moral burden elsewhere. I'm not arguing that we can simply start making things in America on the drop of a dime. Anyone who has been involved in manufacturing knows that there is a lot of manufacturing expertise that has left and can only be done (at the current time, at least) overseas. What I'm poking at is that this is the logical progression of offshoring manufacturing over the last half-century. That strategy is due in part to corporate influence on laws, as well as the government who put those laws in place, as well as the constituents who put those civil servants in place. I'm old enough to remember Ross Perot's quip about the "giant sucking sound" from jobs (and expertise) being sucked out of the country and to witness firsthand the decline of the rust-belt. To act like corporations are blameless in the undermining of local manufacturing is naïve IMO.
- brimble 5y ago
  > Which market research document did you get this factoid from? Tip of the hat for a rare correct use of the word "factoid".
moonchrome 5y ago
Where have you been for the last two years? If it was just a matter of margins we wouldn't have world wide shortages of components, production lines shutting down, etc. Even with massive multibilion investments in fabs all over the place it's going to take years to bring up fab capacity - in the ideal case. And that's just for one component. Apple doesn't even do manufacturing anyway - they outsource every step of the way. What US alternatives are there to Samsung displays or Foxconn assembly ? Apple is too high up the chain to bring about this kind of change, best you could probably do is US assembly if you imposed India like tariffs. Not sure how the US consumers would feel about their iPhone jumping in price by 30%.
- actuator 5y ago
  Systematic destruction of industrial capacity is not fixed in a single year. Even the outsourcing of capacity to PRC, didn't happen in a single year. It happened slowly motivated by margins, not due to some technical breakthroughs that were happening in PRC. > Apple doesn't even do manufacturing anyway - they outsource every step of the way. That's again a conscious choice because of margins. Apple used to manufacture stuff themselves in US. No one is saying Apple has to make display tech as well. Buying stuff from allies like SK, Japan and Taiwan shouldn't be an issue. > Not sure how the US consumers would feel about their iPhone jumping in price by 30%. Last I checked Apple had over 40% margins on their iPhone. If Apple shared the same concerns as their parent country, they wouldn't work to maximize their profits, even if it comes from labour working in inhumane conditions. The systematic destruction of US industrial capacity has been in chase of profits.
  - erosenbe0 5y ago
    I'd argue capacity was not 'outsourced' as American manufacturing never had the kind of capacity seen in Asia. Modern Asian manufacturing scales up faster than USA has ever done outside of WWII. Large numbers of infrastructure and people.
- copperx 5y ago
  > Not sure how the US consumers would feel about their iPhone jumping in price by 30%. Apple sells iPhones in Mexico at 30% over the US price and you still see iPhones everywhere, even considering the purchasing power of the average Mexican is about 1/10 of an American.
kwere 5y ago
it would cost 100s billion $ of capex to "copy" eastern supplies and still fail commercially without tariffs on a quasi-global scale

eloff 5y ago

It's less about cost of living and more about the fact that all the expertise and parts all the way through the supply chain are in Asia. Bringing that industry to the US requires bringing many of the supporting industries too. It's no simple task and probably won't happen at this point.

landemva 5y ago
People expertise can be hired. That doesn't overcome the pollution allowances other countries have. It's cheaper and easier to pollute over there.
- eloff 5y ago
  Is iPhone production very polluting? I don't think that factors into it very much really. More cost of labor, proximity to suppliers, and domain knowledge.
  - landemva 5y ago
    Chemical etching, perfluorocarbons, and massive water consumption is cheaper where pollution regulations are weak. Most of the lines are automated, so labor costs of a running line aren't the big cost issue. Environment and human health have few protections over there. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1566445/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1566445/
shagie 5y ago
... and the logistics of getting those parts. Everything you need to build an iPhone is in one city. This is quite a bit like Detroit of the 50s - where the manufacturer and the entire supply chain for it is geographically compact. Today, it is hard to find a geographically compact industrial chain within the US. http://free.sourcemap.com/maps/57d154a89ca3b16d44e95e5e http://free.sourcemap.com/maps/57d154a89ca3b16d44e95e5e Compare that to, say, the supply chain for the Ford F150 - https://open.sourcemap.com/maps/582b47c785e240e442569015 https://open.sourcemap.com/maps/582b47c785e240e442569015

erichocean 5y ago

Apple has said they could build iPhones in the US, but the cost would be $7 more per iPhone (when they studied it years ago).

morelisp 5y ago
This is completely implausible. In 2016 final assembly alone was estimated to go from at least $10 to $30, ignoring fixed overhead and training. https://www.technologyreview.com/2016/06/09/159456/the-all-american-iphone/ https://www.technologyreview.com/2016/06/09/159456/the-all-a...

bin_bash 5y ago

Not according to Tim Cook: > There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is. https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-... Of course, he would say nice things about China like this so I take it with a grain of salt myself.