By Kathy Chu and Juro Osawa of the WSJ.
"A stiff tariff on Chinese imports could accelerate the migration of electronics factories from China to lower-cost Asian countries like Vietnam, rather than boosting U.S. electronics production, some analysts warn.
Apple, in a statement, said it has created more than two million jobs in the U.S. for engineers, retail and call-center employees and delivery drivers. The company said it works with more than 8,000 suppliers in the U.S. and is “investing heavily in American jobs and innovation.”
HP declined to comment. A Dell spokesman said the company looks forward to working closely with the new administration on “priority IT issues like security, trade and cloud computing.”
While U.S. electronics companies already manufacture high-end, lower-volume products such as the Apple Mac Pro in the country, President Obama and Sen. Bernie Sanders have questioned whether mass-produced electronics—and specifically the ever-popular iPhone—can also be made profitably in the U.S.
The answer, experts say, is that while iPhone assembly in the U.S. is theoretically possible, it is highly improbable because of the difficulty of relocating assembly and other parts of Asia’s sprawling electronics chain to the West.
While iPhones are designed in California, Apple sources memory chips from Korean suppliers and displays—which are the most expensive component in the iPhone—from Japanese suppliers, then uses Taiwanese companies such as Hon Hai Precision Industry Co. and Pegatron Corp. to assemble iPhones in mainland China. Apple also uses U.S. suppliers to make components such as glass and radio-frequency parts in the country.
Mr. Trump “wouldn’t be able to finish (such a move) during his presidency,” said Sanford C. Bernstein’s Alberto Moel.
Another barrier to moving manufacturing back to the U.S. is that U.S. electronics companies often outsource production, so they don’t always have full control over where their goods are made.
With China now the world’s largest consumer market for smartphones and other gadgets, it makes sense for U.S. companies and their assemblers to keep manufacturing bases in Asia, says Steve Chuang, chairman of the Hong Kong Electronics Industry Council, which represents manufacturers in mainland China. Some manufacturing jobs done in China with human labor could be lost to machines if production moves back to the U.S., economists warn.
Last December, Apple Chief Executive Tim Cook said on the CBS program “60 Minutes” that the company manufactures its products in China in part because Chinese workers possess “vocational kind of skills” increasingly difficult to find in the U.S. “That is the reality,” Mr. Cook said.
Even if Apple finds enough workers to assemble in the U.S., the cost of making an Apple iPhone 7 could increase $30 to $40, estimates Jason Dedrick, a professor at the School of Information Studies at Syracuse University. Since labor accounts for only a small part of an electronic device’s overall costs, most of these higher expenses would come from shipping parts to the U.S.
If the iPhone components were also made in the U.S., the device’s costs could climb up to $90, according to Mr. Dedrick’s research with UC Berkeley’s Greg Linden and UC Irvine’s Ken Kraemer. That means that, if Apple chose to pass along all these costs to consumers, the device’s retail price could climb about 14%."