Tuesday, January 24, 2017

The Trump effect? Apple 'could start building iPhones in the US' rather than outsourcing from abroad

The Trump effect? Apple 'could start building iPhones in the US' rather than outsourcing from abroad

  • Asian manufacturer of iPhone component asked to look into US relocation
  • Taiwanese contractor says move to US could double cost of iPhones
  • Trump has vowed to slap tariffs on US firms that outsource to overseas
  • Apple says that US can't compete with China in manufacturing capacity 

Are the aftershocks of Donald Trump’s election being felt in Silicon Valley?

Apple has asked one of its Asian partners who helps assemble its signature product, the iPhone, to begin examining the possibility of moving production to the United States, Nikkei Asian Review reported on Wednesday.
Although the request was made in June, it is significant in light of the election of Trump, who ran on a platform of anti-corporate populism fueled by the loss of domestic manufacturing jobs. 
Hon Hai Precision Industry, the Taiwanese multinational which also goes by the name Foxconn Technology Group, is a contract manufacturer and one of two firms hired by Apple to assemble the iPhone.
The other, Pegatron, which is also based in Taiwan, declined Apple’s request, citing cost concerns.


The iPhone (left), Apple's signature product, is manufactured in Asia, though the company has asked its contractors to look into relocating to the US. Apple CEO Tim Cook is seen right

The two companies make over 200 million iPhone devices every year.
'Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the US,' a source told Nikkei Asian Review.

'Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.'
Foxconn, the world’s largest contract electronic manufacturer, is also Apple’s largest client.

Donald Trump (above) ran for president vowing to impose tariffs on US companies that manufacture products overseas
Though it complied with Apple’s request for a study, its founder, Terry Gou, has also expressed misgivings about the production costs of establishing a US-based operation.
‘Making iPhones in the US means the cost will more than double,’ a source said.
It is believed that Apple and its partners are increasingly nervous about a Trump presidency.
During his election campaign, Trump vowed to impose tariffs on US-based companies that rely on cheaper labor overseas. 
The iPhone and other Apple products are manufactured in Asia.
Apple is just one of several US-based multinational tech giants that have outsourced their manufacturing to China.
While stumping for votes this past March, Trump vowed to use his presidential powers to compel American companies to return stateside.
‘We have such amazing people in this country: smart, sharp, energetic, they’re amazing,’ Trump said.
‘I was saying "make America great again", and I actually think we can say now, and I really believe this, we’re gonna get things coming. We’re gonna get Apple to start building their damn computers and things in this country, instead of in other countries.’
In an email to Apple employees last week, Apple CEO Tim Cook - who has been an outspoken critic of Trump - didn't even mention the president-elect by name as he asked his team to 'move forward together'.
'I’ve heard from many of you today about the presidential election. In a political contest where the candidates were so different and each received a similar number of popular votes, it’s inevitable that the aftermath leaves many of you with strong feelings.'
'We have a very diverse team of employees, including supporters of each of the candidates. Regardless of which candidate each of us supported as individuals, the only way to move forward is to move forward together,' Cook wrote. 
He added that Apple is 'one big family' and encouraged his employees to reach out to coworkers 'if they are feeling anxious'. 
Despite Trump’s claims to bring tech manufacturing jobs back to the US, experts say the task is nearly impossible since China has the personnel, expertise, manpower, and supply chain capacity that are unmatched here. 
‘We shouldn’t be criticized for using Chinese workers’, an unnamed Apple executive told The New York Times in January 2012. ‘The US has stopped producing people with the skills we need’. 


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