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© apple ©wikimedia Electronics Production | November 18, 2016

iPhone’s soon to be ‘made in America’?

EMS giant Foxconn, who manufactures the bulk of Apple’s iPhone's – has reportedly been looking in to the possibility of moving production of the phones over to the US.
Unnamed sources told the Nikkei Asian Review about the plans saying that Apple had asked both Foxconn and Pegatron – the two iPhone assemblers – back in June to consider making the units in the US. "Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns," a source told the Nikkei.

iPhone 7’s BOM sits at about USD 224.80 (with USD 5 in manufacturing cost included)
One source told the paper that while Foxconn is looking in to the request from the Cupertino company, Chairman Terry Gou has been “less enthusiastic due to an inevitable rise in production costs”, the report states.

A move of production to the US would be a costly thing to pull off. Apple accounts for more than 50% of Foxconn’s sales – however, a move would, according to one of the sources, mean that the cost will more than double.

One aspect in this sudden move might be that President-elect Donald Trump may push Apple to make a certain number of iPhone components back home, the report continues.

Evertiq has previously reported that the iPhone 7’s BOM – based on data from IHS Markit – sits at about USD 224.80 (with USD 5 in manufacturing cost included). How and if these figures would change following a move of production is pure speculation at this point.

However, if Apple were move some of the production back to the US this would fall in line with what Trump said during his campaign – make American companies make their products in America.

But there are other things to consider; while Foxconn assembles the iPhones in China, the Cupertino company also procures and sources most of the key components for its phones from other Asian suppliers, as the Nikkei points out.

To name a few; TSMC makes chips for the iPhone, Japan Display along with Sharp supply’s panels and SK Hynix and Toshiba handles the memory chips.

In their report the Nikkei mentions that Trump has singled out Apple on several occasions, vowing a 45% tariff on goods made in China.

"We're going to get Apple to build their damn computers and things in this country instead of in other countries," he said at Liberty University in Virginia in January, the report concludes.

If this move is at all possible – or even likely – we still don’t know. It has previously been said that it would be impossible for the Cupertino company to move iPhone production back to the US – mainly due to the lack of infrastructure and high costs. And Tim Cook, Apple CEO, has previously said in a CBS 60 Minutes program that the country simply do not have enough skilled workers for the production.

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