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Manufacturing iPhone in US could raise price by $100, report estimates
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Jun 13, 2016, 11:18 AM
 
Bringing production of iPhones to the United States could theoretically increase the cost by up to $100 per device, according to a report. Calculations made concerning the manufacturing of components, the opening of factories and the shifting of labor away from existing operations in China and other countries back to the United States would heavily impact the iPhone's construction cost, and would be highly uncompetitive compared to current manufacturing processes.

The report from MIT Technology Review makes estimates for various levels of US-based production. At its simplest, shipping components to US-based factories for assembly instead of current factories would raise the assembly cost per iPhone from between $4 and $10, depending on the estimate, to between $30 and $40 per device.

The increase is derived from increases in the cost of labor by using US workers, as well as more expensive logistics and transportation costs to ship parts to the US, instead of the finished product. Overall, this could raise the final price of an iPhone 6s Plus to consumers by as much as five percent.

A second scenario explores how much of an impact it would be on the price if components were also produced in the US. Experts consulted by the report suggest creating new fabrication facilities in the United States would be similar to other regions, but would still add another $30 to $40 on top of the construction cost at first. "US Factories would be uncompetitive for most of these goods and run at low volumes, raising the differential with Asia even higher," suggests Syracuse University professor Jason Dedrick.

The overall increase to consumers could be as much as $100 per iPhone, the report suggests, but that is assuming raw materials are bought on global markets. If taken to the extreme of being produced out of "American atoms," namely using only resources from within the United States borders, it would be effectively impossible. Rare earth elements would typically be sourced from China, and some materials needed to produce an iPhone simply can't be acquired within the US at the scale Apple would require, making it effectively impossible.

The report does indicate the tremendous difficulty in bringing back manufacturing to the United States, if Apple was compelled to do so by the government. In January, Republican presidential candidate Donald Trump declared he would coerce US companies to perform manufacturing within the country, or face a potential 35 percent tax on goods. In April, Democratic candidate Bernie Sanders expressed a wish for Apple to perform more manufacturing in the US instead of abroad, though without the threat of taxation.
     
Inkling
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Jun 13, 2016, 01:58 PM
 
I'm not a fan of Trump or Sanders, but I do remember that in the 1970s pressure on Asian automakers did get them to build factories in this country and those factories seem to working out quite well. What worked with Toyotas and Kias, just might work with Macs and iPhones.
Author of Untangling Tolkien and Chesterton on War and Peace
     
Mike Wuerthele
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Jun 13, 2016, 03:08 PM
 
Not a like comparison, Inkling, other than "factories." We have steel. We don't have some of the rare earth.
     
Mac User MacNN
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Jun 13, 2016, 08:17 PM
 
I would be willing to pay $100 more, for an iPhone that was made in the US.
     
Mike Wuerthele
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Jun 13, 2016, 08:28 PM
 
Originally Posted by Mac User MacNN View Post
I would be willing to pay $100 more, for an iPhone that was made in the US.
Good! However, I suspect that the vast majority of the market wouldn't.
     
intimidator
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Jun 14, 2016, 11:32 AM
 
We are the number one deposit of rare earth materials. Eco nuts prevent us from using our own resources.
     
Mike Wuerthele
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Jun 14, 2016, 01:03 PM
 
We are indeed, but stuck in the ground and not mineable is the same as not available to US industry.
     
   
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