Several years ago Donald J. Trump entered politics, Apple and her partners built mass factories across China to collect iPhones. Mr Trump first fought for the president promises his supporters that he will force Apple to do these products in America.
Nearly a decade later, few have changed. Instead of bringing its construction home, Apple shifted some production from China to India, Vietnam and Thailand. Almost nothing is done in America and about 80 % of iPhones are still done in China.
Despite years of pressure, Apple’s business still depends on China that the technological giant cannot work without it. It moves by the Trump administration to change the risk of Apple’s behavior that hurts the most valuable company being negotiated in the world. And any serious attempt to move Apple’s production in the United States – if still possible – would need a titanic effort by both the company and the federal government.
In the four days after President Trump’s announcement on Chinese exports 145 % last month, Apple lost $ 770 billion in market capitalization. He returned some of these losses, after Mr Trump gave the manufacturers of electronics consumer in China a temporary suspension.
On Thursday, Wall Street analysts expect Apple to report that sales have increased by 4 % in the latest quarter, partly because people rushed to buy iPhones before the invoice kick. The exhibition offers Wall Street analysts the opportunity to be.
An Apple spokesman refused to make company executives available for this article. The company said this year that it will invest $ 500 billion in the United States over the next four years and start making artificial intelligence servers in Houston in 2026.
David Yoffie, a professor at Harvard Business School, who has written cases for Apple, said the audit was justified because “it is the company that is most at risk of a complete distribution of the United States and China”.
Gene Munster, Managing Director of Deepwater Asset Management, who invests in emerging technologies, estimates that the complete distribution between the United States and China will reduce the value of Apple in half or more. It would fall to be a $ 1.6 trillion company from a $ 3.2 trillion company because about one -third of its sales are associated with products manufactured in China, even if it shifts some production in other countries. And value could be reduced to $ 1.2 trillion if it also lost its sales to Chinese customers, as Samsung’s opponent did after a dispute between South Korea and China governments. Beijing has already discouraged iPhone purchases by government officials.
A significant decline in Apple’s value will wave through the stock market. The company represents about 6 % of the S&P 500 index. This means that for each dollar invested in the fund, about 6 cents go to Apple stock. Investors, and most owners 401 (k), would see that the share was reduced by half.
Apple’s roots in China are running deep. Decades ago, the company worked with Beijing to create construction in China without setting up a consortium with a Chinese company, as required by many US companies. He then perfected the art of assembling devices inexpensive in China and the sale of products in the growing middle class of the country. The combination has won over 80 % of world smartphone profits and has created $ 67 billion in annual Chinese sales.
Over time, the company’s links to China have been strengthened. Today, not only does most of the iPhones in China, but its Chinese suppliers also collect accessories for devices in India and manufacture accessories and airpods in Vietnam.
Apple’s dependence on China has made its supply chain something for a Rorschach test for Trump administration, which wants to bring more electronic construction to the United States. Apple has more power than any other electronics company to achieve the goal of administration. It makes more smartphones than anyone else and spends more money on accessories than opponents, giving it a huge dominance where its suppliers operate.
Trump’s administration wants Apple to start this process. In a April television interview, Commerce Secretary Howard Lutnick said that “the army of millions of and millions of people screwed into small, small screws to do iPhones – this will come to America.”
But Apple’s pressure to leave China could be reversed. New invoices could force Apple to raise iPhone prices or receive smaller smartphone profits. Samsung phones, which are made in Vietnam and are not subject to Chinese invoices, could be cheaper than comparison. Apple could become less competitive at home – a red line that Mr Trump rarely wants to cross.
Apple resisted the construction of iPhones and other devices in the United States because the company’s business team has found it impossible, said two people familiar with the analysis of anonymity. A decade ago, he had a bad experience that supplies screws and finding reliable workers to gather a MAC computer in Texas.
In China, Apple suppliers are able to collect 200,000 people. They work in factories supervised by thousands of engineers with chronic construction. Most live in dorms near the iPhone plant, where screens and other accessories move down the assembly lines larger than a football field.
Finding that many workers and experienced engineers would be impossible in most American cities, said Wayne Lam, analyst of Techinsights, a market research company. He said Apple should develop more automated robot processes to offset the smaller population in the United States.
Mr Lam estimates that if Apple has set up businesses in the United States, he would have to charge $ 2,000 for an iPhone – out of about $ 1,000 now – to maintain today’s profits. The price could be reduced to $ 1,500 in the coming years, as the company reduced the cost of training workers and the creation of accessories.
“In the short term, it is not financially feasible,” Mr Lam said. He added that it also made sense to relocate the production of a device that was almost 20 years old and could be disturbed by a new gadget that caught consumers.
Apple has shown the willingness to move its supply chain when there are incentives. In 2017, a process began to do iPhones in India because the country had high taxes on imports that would have raised prices at a point where Apple could not claim a slice of faster growing smartphone market in the world.
Today, Apple is making about 20 percent of iPhones sold worldwide in India. It also makes some components there, including the metal frame. But it is based on Chinese companies to collect screens and other complex parts.
Matthew Moore, who spent nine years as a design manager in Apple, said India had another advantage that America did not do it: “Engineers, everywhere”.
In order to entice Apple and electronics companies in the United States, Mr Moore believes, Trump administration should invest in education for degrees in science, technology, engineering and mathematics. He also believes that the country should encourage loans for new production facilities, as well as housing with Fannie Mae and Freddie Mac.
Last month, Apple bought the temporary break. Mr Cook, who personally gave $ 1 million to Mr Trump’s inauguration, put pressure on Trump’s administration for his exception to the iPhones and other electronics from 145 % tax on Chinese exports. But it is temporary. The administration said it plans to issue more targeted tariffs for technology products.
Without government investment, Apple and smaller manufacturers will continue to do things in China because they have excessive equipment and engineers, said Mr Moore, who started Cruz, a company that makes materials such as a blender.
“I don’t think the ship has sailed, but it is unreasonable to think in four years we will do iPhones here,” Mr Moore said. “It will take 10 years.”
