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Iphone Businesses China United States Apple

Apple's US iPhones Can All Be Made Outside of China If Needed (bloomberg.com) 186

Apple has a backup plan if the U.S.-China trade war gets out of hand. From a report: The Cupertino, Calif.-based company's primary manufacturing partner has enough capacity to make all iPhones bound for the U.S. outside of China if necessary, according to a senior executive at Hon Hai Precision Industry Co. The Taiwanese contract manufacturer now makes most of the smartphones in the Chinese mainland. China is a crucial cog in Apple's business, the origin of most of its iPhones and iPads as well as its largest international market. But President Donald Trump has threatened Beijing with new tariffs on about $300 billion worth of Chinese goods, an act that would escalate tensions dramatically while levying a punitive tax on Apple's most profitable product.

Hon Hai, known also as Foxconn, is the American giant's most important manufacturing partner. It will fully support Apple if it needs to adjust its production as the U.S.-Chinese trade spat gets grimmer and more unpredictable, board nominee and semiconductor division chief Young Liu told an investor briefing in Taipei on Tuesday. "Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the U.S. market," said Liu, adding that investments are now being made in India for Apple. "We have enough capacity to meet Apple's demand."

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Apple's US iPhones Can All Be Made Outside of China If Needed

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  • US (Score:3, Insightful)

    by Anonymous Coward on Tuesday June 11, 2019 @09:10AM (#58744598)

    Bring the manufacturing to America or fuck off.

    • Re: (Score:3, Insightful)

      by jellomizer ( 103300 )

      The United States Manufacturing never was really good with making small things.
      Unless the process can work well with robots, the American System is difficult for us to profitably make small things that require a high degree of precision.
      Labor is the biggest problem with the United States. While Labor costs are higher, but that isn't the only factor. The United States has a low population density. So getting enough people with skills to do the work into one area is difficult. While countries in Asia, have

      • Re:US (Score:5, Interesting)

        by Anonymous Coward on Tuesday June 11, 2019 @09:46AM (#58744780)

        A number of years ago, I was working with a startup to get something built, which required some metal fabrication, as well as injection molding. I went to companies in China, Russia, Canada, Germany, Japan, Mexico, Italy, Sweden, Finland, and the US.

        Pretty much, if I wanted something done cheaply, China beat everyone out, even factoring shipping.

        If I wanted something made -well-, it was a dead heat. I eventually chose a plant in the US that had easy access to an interstate to get stuff on the road to anywhere in the US, or out to port cities to be exported.

        Once you get the manufacturing line going after the industrial and process engineers leave, workers are not a huge cost. What hit the most was the machinery, testing, ensuring the molds were good, how stuff was packaged and having the best automation in the production line, as well as random, destructive product checks for QC. The cost of workers was minuscule compared to all of those front-loaded costs. Once the line was cranking away, having it in the US was cheaper overall and it gave great PR.

        • by drnb ( 2434720 ) on Tuesday June 11, 2019 @11:30AM (#58745486)

          Pretty much, if I wanted something done cheaply, China beat everyone out, even factoring shipping.

          The magic of currency manipulation, by devaluing your currency everything is on sale, its not just labor costs. Plants, equipment, materials, shipping, etc ... everything.

          • No, currency might be a player in this but it's not the main thing. Chinese are masters at cutting corners. And it works, they do get things done cheaper, often a whole lot cheaper. It will come at a cost to quality, but often the price difference is great enough to justify it.
            • by drnb ( 2434720 )

              No, currency might be a player in this but it's not the main thing.

              When everything is at a 20%+ discount that is a very big thing.

              Chinese are masters at cutting corners. And it works, they do get things done cheaper, often a whole lot cheaper. It will come at a cost to quality, but often the price difference is great enough to justify it.

              Not when after the first couple production runs they quietly make more changes or material substitutions and cheaper transitions to outright defective. Sometimes this occurs when the "partner" you have contracts and relationships with, who did an acceptable first couple of runs, quietly outsources to a local smaller manufacturer without your knowledge.

              • by Anonymous Coward

                How could they do that without your knowledge? You would have to be an incompetent fool to allow them to do that in a way that gets past your onsite inspections, your n house QA testing and your part tracking.
                Oh, you don't do any of those things? Do you not bother to look at your food before shoveling it into your mouth too?

                • by drnb ( 2434720 )

                  How could they do that without your knowledge? You would have to be an incompetent fool to allow them to do that in a way that gets past your onsite inspections, your n house QA testing and your part tracking. Oh, you don't do any of those things? Do you not bother to look at your food before shoveling it into your mouth too?

                  So you are questioning the wisdom of companies that: outsource to China, enter into forced partnerships, enter into technology transfers, train their future competition, etc ... all for the "promise" of being able to sell products in China? A "promise" that has failed foreign companies year after year after year for centuries. Yeah, these companies are suckers.

          • The magic of currency manipulation, by devaluing your currency everything is on sale, its not just labor costs.

            Which might be relevant if the yuan was undervalued. According to the IMF, it's not.

            • by drnb ( 2434720 )

              The magic of currency manipulation, by devaluing your currency everything is on sale, its not just labor costs.

              Which might be relevant if the yuan was undervalued. According to the IMF, it's not.

              You have been ill-informed, the IMF actually says "the renminbi is undervalued somewhere between five and 27 percent." And that's only right now, not including the decades in which outsourcing became the norm.

              "Renminbi currency value is a debate affecting the Chinese currency unit, the renminbi (Chinese: Code:CNY). The renminbi is classified as a fixed exchange rate currency "with reference to a basket of currencies",[1] which has drawn attention from nations which have freely floated currency and has b

        • Once you get the manufacturing line going after the industrial and process engineers leave, workers are not a huge cost. What hit the most was the machinery, testing, ensuring the molds were good, how stuff was packaged and having the best automation in the production line, as well as random, destructive product checks for QC. The cost of workers was minuscule compared to all of those front-loaded costs.

          Labor costs are rolled into all those other things you mention. Labor was needed to create the machiner

          • China was destroyed by Mao, physically, intellectually and culturally. But it then somehow rose out of the ashes in just a few decades. Today much richer per person than, say, India, which never had a Mao, has always had a civil society.

            Whether it is culture or genetics, China and Chinese are different. There will be no manufacturing bloom in Africa despite really cheap labor.

        • For whatever you were making, quality was obviously a fairly serious issue. For high quality items, the US it still competitive in a lot of areas, as you found out. For bottom-line stuff....... China rules
      • Re:US (Score:4, Informative)

        by TigerPlish ( 174064 ) on Tuesday June 11, 2019 @09:48AM (#58744794)

        The United States Manufacturing never was really good with making small things.

        Oh bullshit. We taught Switzerland how to make watches assembly-line vs. cottage-industry. Now they own our most storied names, such as Elgin, Hamilton. Those were American-made watches.

        Our pens and pencils were 2nd to none. (Shaffer, Eversharp, Parker just to name a few.) Now Shaffer is China-made, Eversharp's dead, Parker's made in England or France.

        Our hi-fi was world-class (Fisher, Marantz, McIntosh, to name a few). Fisher's dead, Marantz and McIntosh are part of Japan's D-M Holdings.

        We absolutely mastered small things... then taught the world how to do it.. then gave it or sold it all.

        I'll pay a bit more for an iphone genuinely made in USA, with USA-made components, USA-glass, etc.

        Every country should have competence in making things. Import should be a choice, an open choice, not de-facto forced like Made in China is now.

        • by AmiMoJo ( 196126 )

          I'll pay a bit more for an iphone genuinely made in USA, with USA-made components, USA-glass, etc.

          That isn't going to happen any time soon. They could assemble in the US, but for example there is only one mine producing the rare earths needed and no refineries, so they all get shipped to China for processing and then back to the US again.

          Same with many of the other components. No US suppliers, or the US suppliers are very small and would need to massively increase output. It can be done, but it will take years to happen.

        • by dk20 ( 914954 )

          This is one of the core issues with the US. Stating things as facts when they are not, and usually attempting to rewrite history.

          i have a 1919 Hamilton pocketwatch. Says right on it "Made in USA" so you are correct, those brands are American. Question for you, watches existed LONG before the US did... " The first pocket watch was invented by Peter Henlein in 1510 in Nuremberg, Germany. "

          So while the US did have a need to keep accurate time during the railroad expansion.. they simpy copied something w

      • The United States Manufacturing never was really good with making small things.
        ...the American System is difficult for us to profitably make small things that require a high degree of precision.

        Sony seems to have known about this for quite some time: https://youtu.be/96iJsdGkl44 [youtu.be]

      • The United States Manufacturing never was really good with making small things.

        Yes, American hands are fingers are just too damn big according to a Sony executive. ;-)

    • by jeremyp ( 130771 )

      People don't make things in the USA because it's too expensive. The reason it is too expensive is mostly the cost of labour. The choices are

      a) make it outside the USA

      b) make it in the USA but find some way of not employing expensive humans.

      c) go out of business.

      Consumers don't buy electronic goods based on where they come from but on price, quality and features.

      It's not even like America needs the jobs. As I understand it, employment in the USA is pretty high at the moment. So who actually benefits by forci

      • The USA has fudged it's employment numbers for generations; it's not an accurate metric but makes for nice propaganda and while it is a lie it does reflect some economics so it's not completely useless.

        People who do not collect unemployment are taken off the statistic. People who work a few hours and are under employed are not counted. The IRS could have produced these statistics since the beginning but that would produce accurate results.

        Keep in mind the head of the labor dept is a slimy lawyer who has to

      • by ceoyoyo ( 59147 )

        To be fair, as the former third world rapidly develops they're less and less happy having the US do all the white collar stuff and offshore the nasty jobs. Japan, Korea and Taiwan have moved up the production food chain, and China is also doing so rapidly. If SE Asia goes the European egalitarian route, the US might find itself with competitive labour again.

      • D) Enact tariffs until the imports are the same price as the US goods, or at least until the trade deficit is eliminated.

        I don't have any problem with imported things, as long as it's for a reason other than "it's cheaper". Cuban cigars are prized regardless of their price. Import away. Japanese optics (binoculars, etc) are very well regarded. Scottish whiskey. Swiss watches. There is a market for importing things, but for commodity goods, if we are constantly just buying more from another country tha

        • we'll raise tariffs until it's no longer profitable to buy stuff from China and the situation corrects itself.

          Yeah, by the voters getting pissed at the rapid inflation, and voting out the fuckers who caused it. For example, if you manufacture completed products here in the US using Chinese components, you now have to eat the Trump tariffs or pass all (or some) of it on to your customers. Yay for “helping” American businesses.

          Tariffs only work in the way you suggested when there already are existing domestic competitors producing the same products. Here in the real world, they just end up being a cons

      • by AmiMoJo ( 196126 )

        Labour is expensive in Germany too, but Germany has massive exports. Last time I looked (a few years ago) they exported more by value than China did.

        They do it by making higher quality goods and by offering support services. Even at the lower end it works pretty well, for example discount German supermarkets like Aldi and Lidi sell power tools made in Germany. Not the cheapest, but good quality and they sell. The Japanese do it too, e.g. Makita.

        The same thing could probably work in the US. I always hear peo

        • Labour is expensive in Germany too, but Germany has massive exports.

          Also German consumers will consider where things are made. Giving some preference to German made goods, its good for society and themselves to do so in the long run. Next they'll consider EU made goods, healthy neighbors help Germany in the long run. Then they will consider the Far East goods. Its not a German made only thing but it is a strong consideration and it helps.

          Americans in contrast are too short term thinking. They will save a dollar today at the cost of their job in a few years.

      • c) go out of business. Consumers don't buy electronic goods based on where they come from but on price, quality and features.

        And that is the problem, no consideration for where things are made. Other western countries have a healthier economy and and a healthy export market because their citizens do make such a consideration. In short US consumers drove their jobs overseas because they rewarded the companies that manufactured overseas and punished the companies that manufactured domestically.

    • Bring the manufacturing to America or fuck off.

      Obviously posted by an A.C. because anyone with a functioning brain knows the next administration (either in 2020, or when Trump is finally term limited) will hit the “undo” button on this trade war shit.

      China understands our politics and they’re more than happy to play the long game.

  • by NoNonAlphaCharsHere ( 2201864 ) on Tuesday June 11, 2019 @09:22AM (#58744670)
    Company with $1 TRILLION market cap has a business continuity plan. More at 11.
  • It's almost as if (Score:4, Insightful)

    by rsilvergun ( 571051 ) on Tuesday June 11, 2019 @09:45AM (#58744770)
    politicians who survived the life and death cutthroat world of Chinese politics have a slight edge over a guy that couldn't make money selling gambling, steak and alcohol to Americans.
  • Comment removed based on user account deletion
  • They can't make them without Chinese components, including SoCs, due to a lack of fab capacity.

    • What fabs does Apple use in China? Intel has one in China, TSMC has... two? That hardly seems crippling.
  • rare earth metals they can't

  • by Anonymous Coward

    ... but can they be done without the rare earths China has? Yeah, you can puff your chest as much as you want, but if China decides to retaliate, Apple is f*cked, Apple knows pretty well that if China wants to make them an example, they'll make Apple an example and there's no escaping... this was just to try to placate the investors.

  • ULA promised that they could manufacture RD-180s if needed. [nasaspaceflight.com] Oops, it turned out they can't!
  • Remember the factory to be built in Wisconsin with the help of a ~ $4 billion tax incentive. As far as I know, it hasn't been built and there's talk that what's now planned is multiple facilities, though the latest word is Foxconn will build one factory to make OLED screens. The second referenced site seems to indicate the cost of manufacturing is too high in the US, so Foxconn is looking outside the US to build TV screens. I'm suspicious that Apple can make iPhones in the US for $10 more than they can be
    • by ghoul ( 157158 ) on Tuesday June 11, 2019 @01:44PM (#58746216)

      Manufacturing cost of an iPhone is 200 dollars out of which 160 is parts and 40 is labour. Minimimum wage in China is 4 dollars an hour so 10 hours of work. Minimum Wage in US is 7 dollars so if you put the plant in Missisippi the labor cost is 70 dollars instead of 40 dollars. In return you save about 10 dollars on logistics of shipping parts out to China and shipping phones back and another 10 dollars in tax incentives so yes the difference is 10 dollars.

  • Apple had said it was going to move iPhone production to India awhile ago. If there is real concern about Huawei eavedropping wouldn't any smartphone form the PC also be suspect?
    About iPhone manufacturing in India: Apple to start mass production of iPhones in India with the help of Foxconn [indiatoday.in]

  • Lunacy (Score:4, Insightful)

    by nehumanuscrede ( 624750 ) on Tuesday June 11, 2019 @01:01PM (#58745904)

    It's absolute lunacy to put yourself into a position where a potential adversary controls the vast majority of the manufacturing process you rely upon for goods you sell. Even more so to rely on a SOLE manufacturer who has more control over your product than you do. ( Up until recently, relying on Russian rockets to get into space qualified for this topic. )

    Everyone KNOWS this, but Big Business LOVES cheap labor. Thus, have they whispered into the ears of Politicians for decades which has resulted in the US playing nice with China ( even when we shouldn't have ). Now, they're all pitching a fit because their nice and easy source of cheap labor is being threatened. I suppose the question they have to ask themselves is this:

    Would I rather sell a slightly more expensive product by moving manufacturing home, or not have a product to sell at all when China turns off the cheap labor spigot ?

    Folks, a conflict with China is inevitable. The South China Sea is likely where it's going to start and, depending on the severity of the incident that starts it, things will get ugly very quickly.

    I'll make a prediction right now: IF one of those man-made islands that China swore they would never militarize is the source for any attack on a US vessel, every one of those islands will become priority targets soon after. The US will bomb those islands back into the Stone Age by any and all means necessary.

    It would be advisable for US companies to start shifting manufacturing to someone who isn't going to weaponize it ( and likely just turn it off ) when the US ceases playing the game by Chinese rules.

  • by Anonymous Coward

    I am a life long Democrat but I praise Trump for his action on China with respect to tariffs. I think this is an absolutely great time to increase tariffs on China and any other country with high levels of human oppression in the supply chain. Until Chinese workers have similar working conditions, hours, salary, and benefits (adjusted for local currency of course), as American workers, the tariffs should keep going up. Same goes for environmental policy. To call China a "developing nation" and exempting the

  • Did a US brand have to make products in a Communist nation at all?

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