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Comment by refurb | Hacker News Reader

That’s not true.

Apple has internal transfer pricing which is dictated by accounting regulations and tax law.

Companies try and set transfer prices to minimize local taxes, but need to follow regulations.

A phone made in China is “purchased” by say Apple Canada for some fraction the price it sells for - regulation usually require the Value to reflect the cost of inputs.

So Apple Canada might purchase a phone from Apple China for $600 CAD then turn around and sell it for $1200 CAD in Canada.

It’s the $600 that counts as a Chinese export to Canada.

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Most of that $600 is BOM inputs where most of high end components worth $$$$$ is ultimately captured by US / western suppliers (i.e. chips, sensors, screens for iphones). The actual value of export from PRC in terms of material and labour is $, but still counted as $$$$$+$. Though iphone/high tech unique since US plays hand - sanction $$$$$ PRC components so Apple can't integrate them and raise PRC share of Apple BOM, which IIRC grew to ~20% and on way 40%+ (prc memory + screen) and now <20%. This is something PRC stats has started adjusting for.

No, that’s not how the math works. Apple Pay’s for the valued added, not the total value.

So if Foxconn is assembling a phone from components, they are paid for just that. The export is labor, not a fully valued finished phone.

>not a fully valued finished phone.

No, I should have been more clear relative to original comment. I was pointing out even % Apple charge customs, i.e. imports from PRC, large % is still ultimately not value captured by PRC.

For full priced iphone, i.e. $1200, Apple captures or offshores another big slice of $800 in Ireland for intangibles like software related IP. But within the $400-600 BOM for physical device / import unit cost for customs, ~80% are western components, i.e. western value capture.

> yet the entire value of an iPhone counts only as a Chinese export.

> That’s not true.

You're right. It's not always the "entire" value paid by the consumer.

This is actually something that I think a lot about with tariffs. The price that you pay at the corner store for an item, even an imported item, is nowhere near the price that an importer pays at the border.

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