Apple’s U.S. iPhones Can All Be Made Outside of China If Needed
bloomberg.com
bloomberg.com
The most recent estimate [1] I could quickly find valued the iPhone X at $600 in components alone (excluding assembly), so any trade war would seem to still be incredibly perilous for Apple, especially on their lower-end products.
I haven’t been following any of this, so perhaps they covered it in another story, but for Bloomberg I really expected a bit more of an in-depth analysis.
Even if some details or price estimates are wrong, the fact that they are dependent upon a third party for the most expensive component with no obvious alternative is a problem.
Apple tends to have multiple display providers, even for the same phone model (Sharp, LG, Samsung). They are on top of that problem, mostly.
That is only for LCD. Not for OLED, they are only from Samsung.
https://www.apple.com/supplier-responsibility/pdf/Apple-Supp...
China (381) India (9) US (65) Japan (135) Korea (41)
Outsourcing to India will follow the same trend as other Chinese OEMs doing final assembly in India to circumvent 20% import tariff on phones. Most of the materials are still going to be procured from Chinese supply chains.
Pretty sure this list would count tsmc as a Chinese company.
Edit: To add, China's strength is both logistics and the ability to setup new production processes. Mature processes for old phones can be moved to India for production, but major hardware changes in new sku is still only viable in China because only China has the expertise, logistics, capacity to rapidly iterate and trouble shoot new products.
For example, I was astonished when a $1000 IHS report called iPhone 4 battery at ~$10 when the retail price of a replacement is less than that.
iPhone 3 was certainly around just $30 to $40 dollars in cost, but after that, the "arms race" began.
At around iPhone 4 era, all big makers began putting more and more custom and direct sourced components, and estimating costs got much harder.
Basically, these estimates seem like wild guesses.
China has shown they do not value world opinion.
Here’s the deal: it doesn’t matter if the US started killing every dissident outright. US behavior is not an excuse for unethical behavior in China. The government and citizens of China are not dumb children that can’t behave ethically if there are other unethical things going on in the world.
Be careful what you're seeking to compare; with 11M Uyghurs and 1M of them in re-education camps, China has far more of a percentage of the underclass imprisoned (9%) than in the U.S. (with 1.35% of the black population imprisoned). This isn't to defend the prison practices of the U.S., which are still generally indefensible, but some heart can be taken in that the number of U.S. imprisoned (of all races, but especially black prisoners) has fallen year-over-year for more than a decade, whereas China's re-education camps are still growing.
Interesting. My first thought was that your number was too low, but searching a little it seems you are right, with a couple caveats. The first caveat is that the number for black males is about twice that of the black population as a whole (ie, black females are rarely imprisoned).
The second caveat, which is not one I've seen widely reported, is that the percentage of black males currently imprisoned has dropped sharply over recent years, from 3.5% in 2000 to 2.6% now. This article (with the charts from which I got the numbers) goes into possible reasons: https://www.themarshallproject.org/2017/12/15/a-mass-incarce...
https://static1.squarespace.com/static/5aad3e1a7e3c3aab4ab40...
[1] https://www.independent.co.uk/news/world/asia/tiananmen-squa...
Edit: just to be clear some of your other points are fair although I find the “Indian reservations” a bit dated - they are treated as local sovereigns (e.g. casinos, being allowed to violate state level hunting regulations) and are even now being allowed to expand their territory in some places .
I'm fairly sure that the US is lagging due to historical reasons. Without a war like Germany experienced, there is too much resistance towards a "clean cut" elimination of racism, so you get an exponentially slow decay instead.
The main point, however, is that Europe has shown over a span of several decades that restricting hate speech a) does not lead to any slippery slope where other forms of speech are restricted and b) that restrictions of hate speech are effective at reducing racism in society.
I wouldn't call that "free speech".
> The jurisdictions that took the top 10 places, in order, were New Zealand, Switzerland, Hong Kong, Australia, Canada, the Netherlands and Denmark (tied in 6th place), Ireland and the United Kingdom (tied in 8th place), and Finland, Norway, and Taiwan (tied in 10th place). Selected countries rank as follows: Germany (13), the United States and Sweden (17), Republic of Korea (27), Japan (31), ...
So, yes, I would call what they have free speech, in any meaningful use of the word.
Another example of this is how many governments we overthrew during the Cold War, and how many dictators we installed in their place.
Virtually everyone outside of the hate groups wishes they didn't exist, but it's precisely the commitment to freedom that makes it hard to shut them down.
Is this a human rights issue? Again, we agree that we don't want these groups to exist, but I don't think there's ever been a "right to not have people hate you". I don't see a direct line from human rights to lack of hate groups.
Looking at the history of the KKK, for instance, I find this assertion frankly laughable. The KKK flourished then withered as a pretty direct measure of its government support, not because of some worthy indifference to the organisation. And if you stand up against them, as the Panthers did, well even the NRA will suddenly support gun control.
Which level of government are you talking about? The KKK flourished when local and state government turned a blind eye. In both cases the Feds eventually stepped in.
> And if you stand up against them, as the Panthers did, well even the NRA will suddenly support gun control.
The NRA of the 1960s is not the NRA of today. You may as well compare the 1890 democratic party with the 1950 democratic party.
The KKK flourished when it was a major power in directing local, state and federal (including Presidential nomination) politics of one major party and generally had a blind eye turned to it by the other, at any level where that party had any influence. There wasn't just s “blind eye” from government as a whole, it was a major active player.
Local and state governments weren't turning a blind eye back then, they were turning a hooded one.
>The NRA of the 1960s is not the NRA of today.
I'd agree with you there, while they were just as politically insidious, it seems that back then they had some kind of remaining tether to reality.
.. lets not pretend that the Panthers were some mild group either. A group of people advocating along race lines for the end of capitalist exploitation of their race and releasing of all incarcerated people of their race walking around with fully automatic weapons 'for defense' is not exactly 'moderate'
which is not to say that i do not understand the rationale behind the group given the zeitgeist (and really, why do i need to put a parenthetical here)
I wasn't. Gun control isn't usually brought in against mild groups.
>walking around with fully automatic weapons 'for defense'
To be fair, the opposition had previously bombed them from the air. Having automatic weapons is usually overdoing it for defense, but if your opponent can manage a ramshackle air force, then it may be warranted.
I think I'm playing for par but happy to hear something more engaging than "the us isn't the poster child blablabla" get the real stuff out if you're going to make such a large claim with no meat/fauxmeat to it..
Other, more benign aspects of this policy are things like calling the various languages in china "dialects", even if they are mutually incomprehensible. Even "autonomous ethnic regions" are part of this policy... giving time for some minorities to slowly adapt chinese culture. You have to understand that recent western ideals of cultural pluralism is not widespread in there. Those in power in China view it as good and moral to move uyghur culture into something more closely resembling the broader chinese culture.
I get that most westerners would view this ethos as reprehensible, but if you have goals beyond simply being shocked and angry, then an understanding of their perspective is important.
Yes, they do.
> Their current policy towards the Uyghurs in Xinjiang is a variation of a long-standing policy of sino-fication
Yes, an attitude of compulsory conformity to common tribal identity and the norms, rituals, and behaviors associated therewith is a particularly common thing in human societies, and it's exactly the main reason Muslims are targeted in the West, as well as in China.
> I get that most westerners would view this ethos as reprehensible
A sizable and politically powerful subset of westerners actively support the same kind of ethos and keeping pushing it into government in much of the West, and object to sinofication not because of a drive against such conformity but only because not doing so for any other culture undermines the propaganda supporting their own cultural conformity efforts.
> Yes, they do.
I'd like to read more about this - what reason would they have to hate Muslims?
My understanding is that the CCP's current goal, however ill conceived, is to revert elements of Salafi/Wahhabi Islam imported from Saudi Arabia to Turkey, and subsequently to Xinjiang (by mostly ethnic Uyghurs) post-1985, back to the pre-1985 Sufi Islam. The primary goal is to contain the spread of jihadist doctrine [1] to prevent incidents such as the 2009 Urumqi riots [2] (where hundreds of ethnic Han and Sufi muslims were slaughtered in the streets) as well as other extremist-Islam inspired terrorist incidents [3][4]. By contrast, the Hui Muslims living in the region are extremely well integrated both economically and socially [5] and the Kazak, Dongxiang, Khalka, Sala, Tajik, Uzbeks, Bao’an and Tatar Muslims seem to be doing just fine.
> Yes, an attitude of compulsory conformity to common tribal identity and the norms, rituals, and behaviors associated therewith is a particularly common thing in human societies, and it's exactly the main reason Muslims are targeted in the West, as well as in China.
During the pre-1985 Sufi-majority period, ethnic Uyghurs were allowed to express their traditional culture just like any of the other dozens of ethnic minorities in China do in the present day (for example by wearing brightly coloured clothing, traditional dresses, performing traditional music and dance, eating traditional food). That was the mostly peaceful, secular version of Islam that has been tolerated by the CCP. My understanding is that constructs of the more extreme Wahhabi/Salafi Islam such as burkas, suppression of women's rights, (non-Islamic) education, music, consumption of alcohol, pork, etc., are the kinds of things the CCP is trying to eradicate owing to their belief that these practices lead to extremism which undermines their holy grail of societal stability.
[1] https://www.iris-france.org/wp-content/uploads/2017/11/Asia-...
[2] https://en.wikipedia.org/wiki/July_2009_%C3%9Cr%C3%BCmqi_rio...
[3] https://en.wikipedia.org/wiki/Terrorism_in_China#Chronology_...
[4] https://en.wikipedia.org/wiki/Abdullah_Mansour
[5] https://www.ft.com/content/08b19a76-f389-11e8-ae55-df4bf40f9...
Clearly no country is perfect, but if Apple were to relocate production based on human rights, it seems like a Northern European country would be the most appropriate place.
But if scheduling is ignored, then the only issue becomes cost.
[0]: https://en.wikipedia.org/wiki/Internment_of_Japanese_America...
You didn't read the fine print. They're not even talking about moving production to the US. Which only makes the idea of solving human rights abuses by moving even more puzzling?
I mean, Hon Hai capacity is in nations with human rights abuses for a reason.
I find it hard to draw a line between the human rights violations of the Muslims by China and detaining Central Americans for illegally crossing the US border.
It would be like killing three birds with one stone.
https://www.amnesty.org/en/latest/news/2018/02/5-things-you-...
Sovereign ruled.
> border detentions
Of illegal border crossers.
> hate groups
That danged First Ammendment.
> largest per capita prison population
Probably a statement more about valuing human rights. We don't just execute criminals we don't like.
> a high murder rate
I found the US to be about 90th down the list of countries in the world for murder, at 5.35 per 100k [1].
Maybe we are a little more perfect than you think.
1. https://en.wikipedia.org/wiki/List_of_countries_by_intention...
We wouldn't even be having this conversation on a China-hosted forum
With Apple putting profits before human rights and privacy, it is up to us as consumers to raise a stink.
I think you've misapprehended what the article is saying. It's saying that Apple can produce iPhones, intended for consumers in the US, outside of China.
Now I think we can safely infer from that statement that it's possible for Apple to produce any iPhone outside of China.
What we cannot infer from that statement, is that Apple can produce iPhones in places with no human rights violations.
I mean, moving iPhone production from China, to Vietnam, Myanmar, or Malaysia, for the purposes of making a stand against human rights violations is a bit of a head scratcher. But if all we need to do is move out of China, but not necessarily avoid human rights abuses, then it works.
One of these is not like the others
All jokes aside, can you tell me why one of these is not like the others? As far as I see they are all 3 lower incomer Asian countries or what am I missing?
So by that definition they'd obviously not be able to move production to the United States of America either.
Not that there couldn’t be some kind of compromise where they offer a “pro” model specifically assembled outside of China... I’m thinking a “Blackberry is for serious business” kind of campaign.
While there would no doubt be some serious money available from that market, that’s never been Apple’s MO, so it would be a major shift for the company and would likely skew their mojo. I mean that’s something IBM would do...
Further, higher construction costs would quickly push automation which is almost competitive at China’s labor rates.
Labour costs are certainly not the only thing that matters, but even the $56 per unit you mention is deeply significant and motivating.
However, if they need to chose between higher costs and being unable to manufacture any phones for 8 months they would be willing to eat much higher costs.
Their phones are already at a premium and there is a diminishing return on customers if they keep hiking prices.
I doubt Apple would be willing to lower their profit margins in such an environment. Apple’s P/E is already well below the S&P 500 (16 vs 21) and I don’t think they want to slip into value territory any time soon.
You mentioned the problem.
Maybe they could eat a few % with some spin, but I'm not sure shareholders would be okay with much more.
How does our society change the goal posts, where increased sales and profits are no longer an end goal? They can't be forever. There isn't room for the 4th largest company to grow larger. It'll just be perpetually switching places with Microsoft, Amazon and Alphabet.
From what I understand, this is not so obvious.
There is a ton of parts that only Chinese manufacturer produce at scale, and I wonder if some of them can even be produced elsewhere at any reasonable price in a reasonable time frame (if it takes 10 years to rebuild a factory elsewhere, or if it's only produceable at CERN, I'd conclude it's not an option)
Do we have any single example of a high scale computing product produced without any Chinese part at this point ?
I once had an opportunity to take apart an RZ series, and to my amusement, even capacitors and other passives were Japanese. I never expected Japanese electronics to still be around in 2018.
Even them will source some of the parts from elsewhere, hut at least they still have advanced manufaturing knowledge. I guess they would be faster to move if they needed to cut ties with China.
So I would guess the extra cost would be less than that. You probably aren't talking about much difference here.
https://www.technologyreview.com/s/601491/the-all-american-i...
Hopefully we see more of that.
These trade wars benefit the lucky rather than those willing to change.
Not every company can afford to create a new manufacturing environment, Apple is Priced luxury so their margins are high enough to compensate.
What's interesting to me is once the trade imbalance with Vietnam tips over to their favor what will the US do. Also it's not like Vietnam is some democratic wonderland in terms of their government.
They're not but I don't think the form of government is the key factor as much as how trade works on the ground with China.
Vietnam IMO would likely be more than receptive to lots of new business, possibly making a point not "be like China" in order to assure such business.
Here's the same commentator more recently; https://www.theverge.com/2019/5/23/18637071/rare-earth-china...
Basically, yes, you can make them without Chinese rare earths, and it won't break the bank. You can just dig them up and process them elsewhere.
The threat isn't empty but it's not really a trump card either.
This is all based off what I've read on the topic from mainstream news sources. I'm not an expert in this area.
https://en.wikipedia.org/wiki/Mountain_Pass_rare_earth_mine
https://news.ycombinator.com/item?id=20055069 (Submission looks flagged now for some reason?)
For example: https://en.wikipedia.org/wiki/Mountain_Pass_rare_earth_mine
Or will a trade war with China force everybody to buy Apple products?
I'm so glad I did not choose mechanical engineering as a college major, and instead opted for Computer Sciences. I wasn't around during the 70s and 80s but it appears the jobs in the engineering field has dried up.
Programming appears to be the only field that has resisted globalization, and even then there is still massive offshoring.
When industrial production comes back to the US, the price of consumer goods will rise. Consumers will not be able to afford as much at those higher prices, so some American businesses will lose customers. People will be laid off in other sectors of the economy because of the reduced demand.
Overall, your plan would just shift jobs from other sectors of the economy into manufacturing. The average American would be able to afford less, not more. In other words, Americans would likely be poorer as a result of this policy.
There isn't some magic rule that restricting imports leads to greater prosperity. There are costs to restricting imports, and in general, those costs outweigh the benefits (especially for developed countries).
https://www.technologyreview.com/s/601491/the-all-american-i...
At any rate, I think at some point we need to stop looking at the economic argument and do what's best for US labor, US citizens, and human rights/health/the environment worldwide. Just how much are cheap electronics worth?
Moreover, Americans don’t want these jobs in the first place. Working in factories isn’t the future of labor in America, and we as a society really need to stop fetishizing this kind of “honest” blue collar work.
This article says China hold 97% of rare earth's production:
https://en.wikipedia.org/wiki/Rare_earths_trade_dispute
Anyway, that's an important argument made to make durable phones, and with lightweight software so that you can do more with less. I wish there was some durability review on products so that consumers can understand what companies do to make products have a limited lifespan.--
https://www.usgs.gov/centers/nmic/rare-earths-statistics-and...
There are operational mines in the U.S. and Australia (among others) and processing facilities in Estonia, Malaysia, and 3 processing facilities under construction in the US.
DoD has begun creating large stockpiles, adding >400 metric tonnes per year.
If the global rare earth prices rise enough, or if China continues to try to manipulate its exports to ensure that products using rare earths are manufactured within its borders, then mines eleswhere will open.