US-made iPhones aren't going to happen because America lacks the skill

US President Donald Trump wants to bring as much manufacturing as he possibly can to the United States, and among many other products, Apple's iPhone is near the top of a very long list.

4

Trump's newly imposed tariffs targeting China are being used as a strong-arm maneuver to get the nation back to the negotiation table so a more favorable deal with the US can be worked out. Additionally, the high tariffs against China are to incentivize US companies to move manufacturing to the US by making it not financially viable for their products to be made in China.

Currently, Trump is aiming to implement a 145% tariff on imports from China, which is where Apple manufactures anywhere between 90% and 95% of its iPhones. Additionally, more than half of Apple's sales are iPhones, with a commanding 55.6% of its total hardware sales.

With these numbers in mind, and Trump's tariffs on the country, you can see why Apple's stock has taken an intense hit since the tariffs were announced. So, why doesn't Apple just move iPhone manufacturing to the US? It's not as simple as just building a factory here and beginning production. According to Bloomberg reporter and Apple analyst Mark Gurman, one of the biggest reasons Apple can't just pick up manufacturing in China and place it in the US is because of the lack of skilled engineers within the US.

4

China currently holds millions of people who are educated in operating the machinery required to make an iPhone, along with the necessary skill to piece it together (as much of the work still requires manual labor). Matthew Moore, a former Apple manufacturing engineer, explained that a whole city in the US would need to "put everything down and build only iPhones" to maintain the supply coming out of China. Additionally, Moore said there simply isn't enough engineering support in the US across the fields required to build iPhones. These fields include science, technology, engineering, and mathematics (STEM).

Apple CEO Tim Cook echoed these same sentiments in 2017, when he said during a Fortune magazine event, "China stopped being the low labor-cost country many years ago. The reason is because of the skill and the quantity of skill in one location." The Apple CEO further elaborated that if you took all state-of-the-art tooling engineers in China, you could fill multiple football fields, but if you took all state-of-the-art tooling engineers in the US, "I'm not sure we could fill the room."

It has been suggested that China's engineering prowess could be countered by Apple taking a portion of its incredibly large cash pile and purchasing thousands of acres in the US to build an automated manufacturing plant. However, supply chain experts who have worked on Apple products, China currently has access to lower-cost automation, and still hasn't been able to effectively put in place such a level of automation.

4

Another difficulty with the automation idea is how often Apple changes the design of its products, and even though the appearance of the iPhone has hardly changed in recent years, the components within them have, and even the smallest of design changes means an automated factory needs to be recalibrated.

"You design the thing, rebuild the factory, and then you only have six months to sell it. The pace of change makes it so much harder to automate," according to a person with knowledge of Apple's supply chain who asked not to be identified, per the Bloomberg report

Despite these hurdles, Apple has committed to spending $500 billion across the US on the construction of a new server manufacturing facility slated for Houston a new supplier academy in Michigan, and additional spending being funneled to current US-based suppliers.