President-elect Donald Trump has vowed to bring Apple manufacturing of iPhones back to the U.S. Some pundits have said that will never happen as it would make the cost of the smartphone skyrocket, but that might not be the case.
"Making iPhones in the US means the cost will more than double," a source told Nikkei. And a Phone Arena article says that such a move would raise the price Apple pays for the manufacturing of an iPhone from about $225 per-unit to about $300.
However, entrepreneur Vivek Wadhwa says in aWashington Post column that the thought of Apple building iPhones in the U.S. isn’t that crazy because:
China is becoming unpredictable because of its faltering economy. It may make sense for Apple to locate some of its manufacturing closer to other markets just to protect itself from this uncertainty.
Robots can now do the same manufacturing jobs as humans — for a fraction of the cost. These robots cost less than $40,000 to purchase and as little as a dollar per hour to operate. And unlike human workers, they’ll work 24-hour shifts without complaining.
More than half of the components of Apple’s products are imported into China and practically none of the important, core, technologies are made by Chinese companies. Foreign companies do not trust China and nearly all of the intellectual property in Apple’s products originates from outside it.
What it would cost to move manufacturing to the United States? Wadhwa writes: “For this, it may be best to look at what Apple’s manufacturing partner Foxconn is doing in India. The Economic Times reports that Foxconn is finalizing negotiations to build a $10 billion facility to manufacture iPhones in India. The report anticipates it will take 18 months to get this operational.
“India does have a labor cost advantage over the U.S. but robots could eliminate this. Similar manufacturing facilities could be set up in the United States, product by product.
“Of course, this will not be easy and there are many risks. But it certainly is possible for Apple to bring manufacturing back to the United States. If Apple can do this, so can most other companies; their value chains are a lot less complex than Apple’s.
“So it may turn out that for once, Donald Trump’s rant isn’t so crazy.”
Wadhwa (pictured) is an American technology entrepreneur and academic. He is a fellow at the Rock Center for Corporate Governance (a joint initiative of Stanford Law School and Stanford Graduate School of Business); the Director of Research at the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering, Duke University; and the author of the 2014 book Innovating Women: The Changing Face of Technology.