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They have their entire production in Taiwan, which probably feels like a good move right now. If they did final assembly in the US, US tariffs would be better,

They have their entire production in Taiwan, which probably feels like a good move right now. If they did final assembly in the US, US tariffs would be better, but selling outside the US would mean importing parts into the US and exporting computers outside, paying tradewar-level tariffs both ways. The way they are set up now they get hit harder on US imports but the rest of their customers aren't affected at all.

vlovich123 2y ago
Wouldn’t it make sense then to spin up a separate final assembly within the US? Or do their sales not warrant that kind of investment?
- re-thc 2y ago
  > Wouldn’t it make sense then to spin up a separate final assembly within the US? Like it can just be done? > Or do their sales not warrant that kind of investment? It's not so simple. That's the equivalent of other countries thinking they can just spin up a "silicon valley" outside the US. Sales or not it doesn't work like that.
  - theteapot 2y ago
    Silicon Valley == assembling laptops?
    - re-thc 2y ago
      The point is you can’t just shift and replicate so easily. Same applies whether it’s farms or even clouds. You downplay and make it sound easy. It’s all great in theory and to talk about it. Imagine if everyone moved assembly to the US. The demand would skyrocket salaries and other costs with supplying not keeping up and then you’d be paying even more than the tariffs itself.
      - hedora 2y ago
        Assembly plants are easier to spin up than, say fabs. Foxconn is doing exactly that: https://www.taiwannews.com.tw/news/6068073 https://www.taiwannews.com.tw/news/6068073 Not sure how many jobs that translates to. Their assembly lines are incredibly automated, so many of them require advanced degrees will pay well. There’s probably also some manual assembly work too.
        re-thc 2y ago
        > Foxconn is doing exactly that They did too in Wisconsin in 2017. /s Let’s see when it actually happens.
- gleenn 2y ago
  I see you getting downvoted which seems a bit harsh given it seemed like a very honest question. As far as I understand, a huge amount of materials and intermediate steps and companies are over in Taiwan or Shenzen or other places in Mainland China. Even if you could do some parts in the US (like final production) all the sub-components and companies who can actually produce them are dotted over Asia. This is part of the problem in raw economic terms: there is a large vendor and/or geographic lock-in. It's hard to get manufacturing jobs and work back in the US because most of these lines if production are somewhere else and moving one or even a few parts can't overwhelm the huge cost of moving stuff over the ocean potentially multiple times. I read that a brake manufacturer was particularly screwed even within North America because steel came from Canada, partial assembly would occur in Mexico and in the US, and then the finished product might cross a border yet again. Without tariffs this wasn't so bad, but if all the products have to cross a ton of borders a lot of these supply chains are in deep trouble.
  - trhway 2y ago
    >Shenzen or other places in Mainland China Shenzen, Dongguan, Guangzhou - ie. the Pearl River Delta, population 86 million, that somebody called a largest factory on Earth. I see no way to beat that "factory" in any manufacturing game (the first thing in manufacturing is scale). I think we were just lucky that that factory has been working for us basically "at cost" (and very low cost at that). All good things come to an end though.
    - theshrike79 2y ago
      Yep, even if 0.1% of those people are experts on a very specific field of manufacturing, that's immediately 86k people. You can't beat that with any amount of automation.
      - trhway 2y ago
        well, automation itself has a tariffs problem - all the components for automation are mostly foreign made, mostly in China, and even to start - the R&D in automation requires large unimpeded churn of parts and components with quick turnaround, and the tariffs would tremendously impede it and increase cost of it which in R&D means increased risk of failure and a much decreased R&D result for a given budget and timeframe.
- marcoglauser 2y ago
  Final assembly in the US would probably be more expensive due to the following reasons: 1. Parts would still have to be imported. So each part will have tariffs added. 2. Some parts are sourced from China and would therefore face even higher tariffs. 3. Spinning up a final assembly in the US is expensive. Given the current instability and chaos, starting a multi year project of spinning up a final assembly in the US is a risky move. What if the tariffs are gone in 4 years? Now you have an expensive final assembly in the US that can't compete with the one in Taiwan anymore.
- flowerthoughts 2y ago
  For tarrifs, that seems equivalent to selling the final assembly at cost to a US sales subsidiary? Or would a final laptop have lower tarrifs than its parts? They're halting the low tier laptops, so it's probably where they don't have enough margin to keep a competitive price.
- danpalmer 2y ago
  The US doesn't have sufficient supply of manufacturing skills to do this. Maybe Framework could, but there isn't capacity for most manufacturing of products to move to US assembly. You also can't underestimate the difficulty of that training, it's not just training the workers doing the final assembly, it's the entire org chart being built around manufacturing. China and Taiwan (for consumer electronics) have decades of recent experience in doing this and have highly optimised processes, the US has never had these skills at the volume that Asia does currently, and the last time it was remotely close was decades ago. If the US decided that the 20-year priority was to be great at manufacturing then sure, it could probably get back to being world-class at this, but there's a reason why countries typically progress out of being manufacturing economies into being service economies – it's just a worse business to be in.
- Vilian 2y ago
  Take years, and those tariff are going to get removed in the next election anyway
trhway 2y ago
>but selling outside the US would mean importing parts into the US and exporting computers outside, paying tradewar-level tariffs both ways exactly. This is why it doesn't make much sense to setup a US shop as it will be for US market only. The product produced in a US shop would still cost even for domestic market at least like "imported plus tariff" and with no ability to export it. There is a reason Russian cars are complete crap and aren't exported. That reason is called tariffs.

vlovich123 2y ago

Wouldn’t it make sense then to spin up a separate final assembly within the US? Or do their sales not warrant that kind of investment?

re-thc 2y ago
> Wouldn’t it make sense then to spin up a separate final assembly within the US? Like it can just be done? > Or do their sales not warrant that kind of investment? It's not so simple. That's the equivalent of other countries thinking they can just spin up a "silicon valley" outside the US. Sales or not it doesn't work like that.
- theteapot 2y ago
  Silicon Valley == assembling laptops?
  - re-thc 2y ago
    The point is you can’t just shift and replicate so easily. Same applies whether it’s farms or even clouds. You downplay and make it sound easy. It’s all great in theory and to talk about it. Imagine if everyone moved assembly to the US. The demand would skyrocket salaries and other costs with supplying not keeping up and then you’d be paying even more than the tariffs itself.
    - hedora 2y ago
      Assembly plants are easier to spin up than, say fabs. Foxconn is doing exactly that: https://www.taiwannews.com.tw/news/6068073 https://www.taiwannews.com.tw/news/6068073 Not sure how many jobs that translates to. Their assembly lines are incredibly automated, so many of them require advanced degrees will pay well. There’s probably also some manual assembly work too.
      - re-thc 2y ago
        > Foxconn is doing exactly that They did too in Wisconsin in 2017. /s Let’s see when it actually happens.
gleenn 2y ago
I see you getting downvoted which seems a bit harsh given it seemed like a very honest question. As far as I understand, a huge amount of materials and intermediate steps and companies are over in Taiwan or Shenzen or other places in Mainland China. Even if you could do some parts in the US (like final production) all the sub-components and companies who can actually produce them are dotted over Asia. This is part of the problem in raw economic terms: there is a large vendor and/or geographic lock-in. It's hard to get manufacturing jobs and work back in the US because most of these lines if production are somewhere else and moving one or even a few parts can't overwhelm the huge cost of moving stuff over the ocean potentially multiple times. I read that a brake manufacturer was particularly screwed even within North America because steel came from Canada, partial assembly would occur in Mexico and in the US, and then the finished product might cross a border yet again. Without tariffs this wasn't so bad, but if all the products have to cross a ton of borders a lot of these supply chains are in deep trouble.
- trhway 2y ago
  >Shenzen or other places in Mainland China Shenzen, Dongguan, Guangzhou - ie. the Pearl River Delta, population 86 million, that somebody called a largest factory on Earth. I see no way to beat that "factory" in any manufacturing game (the first thing in manufacturing is scale). I think we were just lucky that that factory has been working for us basically "at cost" (and very low cost at that). All good things come to an end though.
  - theshrike79 2y ago
    Yep, even if 0.1% of those people are experts on a very specific field of manufacturing, that's immediately 86k people. You can't beat that with any amount of automation.
    - trhway 2y ago
      well, automation itself has a tariffs problem - all the components for automation are mostly foreign made, mostly in China, and even to start - the R&D in automation requires large unimpeded churn of parts and components with quick turnaround, and the tariffs would tremendously impede it and increase cost of it which in R&D means increased risk of failure and a much decreased R&D result for a given budget and timeframe.
marcoglauser 2y ago
Final assembly in the US would probably be more expensive due to the following reasons: 1. Parts would still have to be imported. So each part will have tariffs added. 2. Some parts are sourced from China and would therefore face even higher tariffs. 3. Spinning up a final assembly in the US is expensive. Given the current instability and chaos, starting a multi year project of spinning up a final assembly in the US is a risky move. What if the tariffs are gone in 4 years? Now you have an expensive final assembly in the US that can't compete with the one in Taiwan anymore.
flowerthoughts 2y ago
For tarrifs, that seems equivalent to selling the final assembly at cost to a US sales subsidiary? Or would a final laptop have lower tarrifs than its parts? They're halting the low tier laptops, so it's probably where they don't have enough margin to keep a competitive price.
danpalmer 2y ago
The US doesn't have sufficient supply of manufacturing skills to do this. Maybe Framework could, but there isn't capacity for most manufacturing of products to move to US assembly. You also can't underestimate the difficulty of that training, it's not just training the workers doing the final assembly, it's the entire org chart being built around manufacturing. China and Taiwan (for consumer electronics) have decades of recent experience in doing this and have highly optimised processes, the US has never had these skills at the volume that Asia does currently, and the last time it was remotely close was decades ago. If the US decided that the 20-year priority was to be great at manufacturing then sure, it could probably get back to being world-class at this, but there's a reason why countries typically progress out of being manufacturing economies into being service economies – it's just a worse business to be in.
Vilian 2y ago
Take years, and those tariff are going to get removed in the next election anyway

trhway 2y ago

>but selling outside the US would mean importing parts into the US and exporting computers outside, paying tradewar-level tariffs both ways exactly. This is why it doesn't make much sense to setup a US shop as it will be for US market only. The product produced in a US shop would still cost even for domestic market at least like "imported plus tariff" and with no ability to export it. There is a reason Russian cars are complete crap and aren't exported. That reason is called tariffs.