
Apple’s U.S. iPhones Can All Be Made Outside of China If Needed - jason_zig
https://www.bloomberg.com/news/articles/2019-06-11/hon-hai-has-enough-ex-china-capacity-to-make-u-s-bound-products
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chrismeller
So this is “made”, not _made_... assembled somewhere that is not China (so
India), but there’s no mention of where all the components they’re assembling
are being produced at.

The most recent estimate [1] I could quickly find valued the iPhone X at $600
in components alone (excluding assembly), so any trade war would seem to still
be incredibly perilous for Apple, especially on their lower-end products.

I haven’t been following any of this, so perhaps they covered it in another
story, but for Bloomberg I really expected a bit more of an in-depth analysis.

1: [http://fortune.com/2017/09/18/apple-iphone-x-
margins/](http://fortune.com/2017/09/18/apple-iphone-x-margins/)

~~~
H8crilA
Components are not made in China, at least mostly. Chips are from tsmc for
example. Mainland China is responsible for the final assembly.

~~~
dirtyid
CTRL+F through Apple's supplier list:

[https://www.apple.com/supplier-responsibility/pdf/Apple-
Supp...](https://www.apple.com/supplier-responsibility/pdf/Apple-Supplier-
List.pdf)

China (381) India (9) US (65) Japan (135) Korea (41)

Outsourcing to India will follow the same trend as other Chinese OEMs doing
final assembly in India to circumvent 20% import tariff on phones. Most of the
materials are still going to be procured from Chinese supply chains.

~~~
H8crilA
You need to understand the political difficulty with calling your supplier
Taiwanese before reading any list like this.

Pretty sure this list would count tsmc as a Chinese company.

~~~
dirtyid
You should at least read the list before making assumptions. The official
suppliers list clearly differentiates between PRC (381) and Taiwan (67). From
cursory reading, China supplies more materials and components than all other
country combined. Some of it is lower tech and can be replaced, but not all of
it and certainly not in the short term.

Edit: To add, China's strength is both logistics and the ability to setup new
production processes. Mature processes for old phones can be moved to India
for production, but major hardware changes in new sku is still only viable in
China because only China has the expertise, logistics, capacity to rapidly
iterate and trouble shoot new products.

------
Operyl
Note: Unlike what some people will think at first thought, these iPhones are
still not likely being made in the US. They're going to invest further into
their factories in India.

~~~
dvduval
Sure, to the next "Huawei" stealing our secrets will come out of India. At
some point we have acknowledge that cell phone can be made anywhere, and the
people making them will surely create their own companies. It is the natural
end game.

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Shivetya
I think Apple should stand by their human rights mantra and move their
production out of China. It should not be a question of where they are sold,
the only question a company with their supposed rights advocacy is where they
are produced.

China has shown they do not value world opinion.

~~~
dvduval
About 850 million people have lifted themselves out of poverty in China since
the eighties. It's extraordinary. Just want to be clear the US is not exactly
perfect when it comes to human rights. Sure, China had a lot they need to do
better, but the improvements are incredible. In the US, look at Indian
reservations, border detentions, hate groups, number of people in jail... We
are not the human rights poster child.

~~~
threezero
I’m not sure I’d call China running over people with tanks and imprisoning
millions of Muslims in concentration camps “improvements”.

~~~
dvduval
From the East India company and the opium wars and the unbalanced treaties, to
the Chinese civil war and the invasion of Japan, it's not easy for an outsider
to understand just how strongly China considers anything that would bring
about the instability that they experienced in the past. Most Chinese people
support preventing instability, as in the 80s they had the largest famine in
human history. Sometimes they are heavy handed and I think they acknowledge
this, and would even tell you that it's not right what they did, but I think
the average Westerner does not really get the perspective of the reasoning
behind it. Think about how many people we have imprisoned in our so-called
drug war. As a percent of our population, it's a lot more than in China.

~~~
sdwa
I don't find those trying to explain away China's disdain for human rights by
using historical arguments to be in any way credible. Taiwan alone proves that
it's possible for China to be a democracy with respect for human rights. But I
suppose you're right, it's not easy for me to really get into the mind of
someone like you who is comfortable with explaining away organ harvesting by
referring to the need for "stability". That which does not bend, will break.

~~~
dvduval
How many Iraqi civilians did US government forces kill? The US nuclear bomb
drops on Japanese ciivilians? Was that fine compared with organ harvesting? My
point is not that any of this is okay, but so easy to point the finger and
"they" are the bad people and we are good.

~~~
sdwa
It is easy to point the finger, yes, because no Western country is nearly as
bad as China when it comes to human rights, and to suggest otherwise is peak
contrarianism. I'm not going to suggest the West is perfect, but it's without
question that China is much worse. I'd also like to restate that your claim
that historical events dictate that China must abuse human rights to lift
people out of poverty is nonsense because Taiwan is Chinese, democratic,
developed, and doesn't abuse human rights.

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jdhn
Obviously they can be made outside of China. What Wall Street would care about
is whether or not the assembly cost would be raised, and how Apple would deal
with that (pass the additional cost onto the customer, or take the hit and
absorb a little/all of the added cost).

~~~
djsumdog
Would they really raise prices though? They have $800 billion. They're still
the 3rd largest company on the planet. They charge $1000 for their flagship.
They could probably easily eat that cost, still generate profit (although less
profit) on the hardware and still spin that to make their shareholders happy.

Their phones are already at a premium and there is a diminishing return on
customers if they keep hiking prices.

~~~
solarkraft
> although less profit

You mentioned the problem.

Maybe they could eat a few % with some spin, but I'm not sure shareholders
would be okay with much more.

~~~
djsumdog
This is what I don't get. That's insane. You cannot have infinite growth. At
some point, sales will drop. A growing number of people want to fix rather
than replace and consume.

How does our society change the goal posts, where increased sales and profits
are no longer an end goal? They can't be forever. There isn't room for the 4th
largest company to grow larger. It'll just be perpetually switching places
with Microsoft, Amazon and Alphabet.

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duxup
Just for everyone in world's sake / security it would seem to be a good idea
to spread manufacturing out all over the world.

Hopefully we see more of that.

~~~
hurrdurr2
That's what manufacturers are already doing...moving production to places like
India and Vietnam.

What's interesting to me is once the trade imbalance with Vietnam tips over to
their favor what will the US do. Also it's not like Vietnam is some democratic
wonderland in terms of their government.

~~~
artificial
Fascinating that business is being done for western countries in communist
countries. Ideologically it's curious that there isn't more of a demand from
consumers, evidently this underlines how important cost is.

~~~
Synaesthesia
They just go to where there are low labour costs and many suppliers.

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dirtyid
Since the article suggest the pivot will be to India, keep in mind that India
is speculated to be the next US trade war. In the last two weeks India has
been removed from the preferential trade agreement and threatened with
sanctions via Countering America’s Adversaries Through Sanctions Act for
possible Russian S400 acquisition.

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mensetmanusman
There would be massive global environmental benefits moving the supply chain
to western countries. These devices should be more expensive, the hidden cost
is in killing the next generation because humanity isn’t handling industrial
waste properly (because we outsourced the problem to China.)

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jepler
vs [https://www.nytimes.com/2019/01/28/technology/iphones-
apple-...](https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-
made.html) "A Tiny Screw Shows Why iPhones Won’t Be ‘Assembled in U.S.A.’"

~~~
pwinnski
Yes, the claim is "outside of China," not "in the USA."

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_emacsomancer_
Perhaps assembled outside of China using Chinese components.

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baybal2
They can manufacture electronics pretty much anywhere, but they will still
have to haul all parts from China.

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cronix
But can they make any products at all without Chinese Rare Earth materials?
Production is at the end... I believe that is the Ace in the sleeve. Just jack
the price of rare earth minerals 1000%, or temporarily halt production. It
won't matter what country they are manufactured in if you can't get all of the
parts you need, or get them economically...

~~~
briffle
Most other rare earth mines closed up because they couldn't compete with
China's price (which was rumored to be HEAVILY subsidized to corner the
market) if you increase the price of rare earth minerals 1000%, you will
quickly see many of those mines re-activate, as they are now profitable to
run.

For example:
[https://en.wikipedia.org/wiki/Mountain_Pass_rare_earth_mine](https://en.wikipedia.org/wiki/Mountain_Pass_rare_earth_mine)

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amelius
How about components for Desktop PCs?

Or will a trade war with China force everybody to buy Apple products?

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Whatarethese
I really wish shareholder would sacrifice a little profit to allow these to be
made in the states. So many US jobs.

~~~
hurrdurr2
If you thought iPhones are expensive now how much do you think they will be
built with American labor? How many Americans do you think will want those
jobs building iPhones almost nonstop for up to 12 hours a day?

~~~
Amezarak
At most about $100 more than they cost now.

[https://www.technologyreview.com/s/601491/the-all-
american-i...](https://www.technologyreview.com/s/601491/the-all-american-
iphone/)

At any rate, I think at some point we need to stop looking at the economic
argument and do what's best for US labor, US citizens, and human
rights/health/the environment worldwide. Just how much are cheap electronics
worth?

------
jokoon
Does that include rare earths?

This article says China hold 97% of rare earth's production:

[https://en.wikipedia.org/wiki/Rare_earths_trade_dispute](https://en.wikipedia.org/wiki/Rare_earths_trade_dispute)

Anyway, that's an important argument made to make durable phones, and with
lightweight software so that you can do more with less. I wish there was some
durability review on products so that consumers can understand what companies
do to make products have a limited lifespan.--

~~~
HeXetic
My understanding of the rare earths issue is that the reason China controls
that much of the production is because all the extraction & production
elsewhere shut down due to an inability to compete with China's prices. You
basically have to open pit enormous areas to get any quantity of them.

If the global rare earth prices rise enough, or if China continues to try to
manipulate its exports to ensure that products using rare earths are
manufactured within its borders, then mines eleswhere will open.

~~~
dgemm
Mothballed facilities like the mountain pass mine are already reopening.

