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Bringing iPhone Assembly to U.S. Would Be a Hollow Victory for Trump: The president’s tariffs on Chinese imports could hurt Apple without addressing the real challenge of China by Greg Ip of The WSJ. Excerpt:
"Apple’s iPhone is one of the most successful consumer products in
history, and one of the most globalized. The iPhone 7’s camera is
Japanese, its memory chips South Korean, its power management chip
British, its wireless circuits Taiwanese, its user-interface processor
Dutch and the radio-frequency transceiver American, according to a study
of the value added in smartphones by Jason Dedrick of Syracuse
University and Kenneth Kraemer of the University of California at
Irvine.
The factory workers who assemble iPhones in China contribute
just 1% of the finished product’s value. Apple’s shareholders and
employees, who are predominantly American, capture 42%.
Suppose Apple decided that all the phones it sells in the U.S. would
be assembled here. Mr. Dedrick estimates each phone requires two hours
of assembly. For 60 million phones, that means 120 million hours of
work, or roughly 60,000 jobs.
Hiring that many workers is no picnic: In 2013 Motorola
Mobility set out to make its Moto X phone in the U.S. but struggled to
find enough American workers according to Willy Shih, an expert in
manufacturing at Harvard Business School who is also a director of Flex
Inc., the contract manufacturer that Motorola used. In 2014 Motorola
decided to outsource production. Apple has encountered similar problems assembling its Mac Pro computer in Texas.
Assuming Apple could find 60,000 workers, it would have to hire
many away from other employers given how low unemployment currently is.
The benefit of the wages they earn would be offset by the higher prices
other Americans pay for their phones.
How much would that add to the price of a phone? Mr. Dedrick
says about $30; Mr. Shih thinks it would be more because of the cost of
shipping individual components to the U.S. Still, such an increase would
hardly kill sales of iPhones, now priced at $449 to $1,099. The bigger
cost of U.S. assembly, says Mr. Dedrick, would be the inability to
quickly add hundreds of thousands of workers when new phones are
launched, which is only possible in Asia. Apple can charge premium
prices in part because it introduces superior features before its
competitors do."
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