Experts warn iPhones would cost over 2900% more if made in America
iPhones would be way more expensive if they were made in the US, according to experts.
In fact, if Apple moved production to the US, it's likely they wouldn't be able to produce enough iPhones to meet demand. According to a Forbes report, capacity would reach a few million units a year at best.
In such a scenario, iPhones would become a rare luxury item that's affordable only to a tiny fraction (1%) of the population. Without alternatives, the price of a single iPhone could hit the $30,000 to $100,000 range - which is a whopping $2900 increase from those currently on the market.
With Donald Trump imposing extreme tariffs on many parts of the world, Apple's products are likely to be hit. This could very well mean that you, the consumer, absorb any price increases, whether that be from companies like Apple absorbing the tariffs and increasing their prices, or the consumer absorbing the cost of companies moving production to the United States.
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So, why would iPhones be more expensive if made in the US?
Well, contrary to what you might think, the core issue isn't so much down to labour costs. Turns out, it's more about the challenge of replicating the highly specialised skills required to manufacture iPhones at the current scale.
Apple CEO Tim Cook pointed out that the US is lacking certain key skills required for manufacturing processes. He spent 25 years working with Chinese manufacturers before becoming the company's CEO, following Steve Jobs and was vital in scaling Apple's production to meet the demand for billions of iPhones.
So, if anyone knows where to source skill, it's him.
"The reason is because of the skill… and the quantity of skill in one location… and the type of skill it is," Cook said in a previous interview, adding that one of the essential skills is precision tooling.
"The products we do require really advanced tooling," Cook added. "And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here. In the US, you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields."
What would happen to Apple as a result?
While it's not impossible to replicate the desired technical skills, it would likely take 'many years' according to Forbes due to the 'nature of the skills required.' A similar challenge occurred with Elon Musk's Tesla in 2017 when the Model 3 was delayed because the company had to redesign a critical piece of supplier software. The electric car maker aims to 'mass-produce without sacrificing quality,' the expert wrote. While Tesla managed to recover some costs from suppliers, it wasn't enough to offset the lost revenue.
Meanwhile, Apple's massive scale gives it leverage when negotiating with component suppliers. But reducing its manufacturing output by 50 to 100 times would put the tech giant at a huge disadvantage - not to mention, it could possibly kill off one of the most valuable companies in US history.
Although, Samsung would likely be thrilled to hear that Apple was being forced to shift its production to the US.