Why Can’t the USA Make iPhones

iphone made in china

In fact, why are smart cell phones being developed in the USA but made in China? Several years ago, President Obama asked this question to Steve Jobs, the founder, and CEO of Apple Corporation. Jobs’ answer was as follows: it is not only that in China it is possible to pay less to workers, though they are qualified and diligent enough. The factories there are more flexible, the production is quicker to reconfigure when there is another innovation. Faster than in the U.S., the change of tooling, faster switch to a new product OEM.

Okay, but let’s imagine that Jobs under pressure from the president persuaded one of the Chinese manufacturers to open a factory in the U.S. or decided to start producing his own phone. In principle, it is possible, some of the most perfect laptops of the same “Apple” are made in the United States as all IT start-ups are being developed in the USA and Europe.

As of July 2016, the price of the last model of the iPhone was 399 dollars in the U.S., of which the cost of parts – 156. Thus, the screen with a protective glass and chips that control the output of the image, costs about $ 20. Modem, memory, and the entire radio part (receiver, transmitter, and amplifier) – $ 15, chips that control the battery – about $ 7. Assembly costs (by different estimates) 4-10 dollars. If you assemble iPhones in the U.S., still receiving components from around the world (and mostly from same China), the model iPhone SE, according to economists, will rise in price by 30-40 dollars. Mostly not because of higher wages in America, but because of the increased cost of delivery of components to the place of assembly (bring a ready-made phone from China to the U.S. is cheaper than a handful of parts from different enterprises around the world).

Okay, and if the parts are made on American soil? In total, Apple has 766 suppliers of components for all products, including tablets and laptops (of which 346 in China, 126 in Japan, 69 in the U.S., and 41 in Taiwan). The most complex components – processors and other chips – are developed in the U.S., where they make almost all the machinery for the factories to produce them, but the production itself is exported to other countries. Jason Dedrick, a professor at the University of Syracuse, New York, calculated that if you transfer the production of iPhone components to the U.S., but the raw materials for them are still purchased on the global markets, the phone will rise in price by about $ 100.

Let’s imagine now that “Apple” wants to achieve complete independence from other countries. The composition of the iPhone includes 75 chemical elements – two-thirds of the table Mendeleev. Not all of them are available in the United States. Or, if they are, for various reasons, they are not profitable to produce. Thus, in the U.S. there is little bauxite – ores from which aluminum is smelted for the body of the iPhone, and there are no certain minerals required for the super-strong screen glass. China gives 85% of the world’s production of rare earth elements. Among them, hafnium required for iPhone transistors, neodymium, which is part of the microphone magnets, speaker, and vibrator that sends a call signal. The camera lens needs lanthanum.

So there is no need for supplies from other countries. No other country is now able to produce modern technology entirely in its territory, from the mine to the packaging before it is shipped to stores.