Apple is considering Donald Trump's statement that he wants them to move their manufacturing processes in the United States. Apple products are always been tagged as designed in Cupertino and generally is manufactured and assembled by suppliers in China. If the said agreement will happen, will the people see a "made in USA" labels on their apple products?
Based on the report by Nikkei Asian Review, Hon Hai Precision Industry also known as Foxconn Technology Group is one of Apple's biggest suppliers. They are currently located in Taipei's Tucheng District which makes 200 million iPhones per year in their Chinese factories. However, they are planning to move the production of iPhone in the United States.
According to TechTimes, Apple gets all its component all over the world but the assembly and production of iPhones is based on China. Why China? In China Apple could bring huge amount of profit margins by the reduced cost in China and a lower labor cost which basically fuels their company.
The Foxconn may have complied with Apple's request on moving the production to United States but the Chairman Terry Gou is not supportive on this move because of the expected rise on the production and labor cost.
The making of the future iPhone products in the United States will create a double cost of production that would greatly affect the profit margin of the Apple and its suppliers. It has been reported that it would cost $225 to manufacture a 32 GB model of an iPhone 7 that could be sold for $649. Then given that the manufacturing would be brought to USA it would halved the profit margin from over $400 to around $200 only, excluding all the advertising expenses.
The decision is still on the Apple if they would pursue on moving to its home country and agree with the terms of Donald Trump. Let us know about your thoughts on this news.
