Take a look at the back of any iPhone and you’ll see a familiar phrase that’s been printed on almost one billion units of the iconic product.
Designed by Apple in California. Assembled in China. Like everything at Apple, that wording is deliberate.
Apple designs the exterior, writes the software, researches new technologies and develops its own chips in California,
which allows it to sell devices for 65 percent more than their cost.
But iPhones are assembled in China for a reason. It’s easy to assume that reason is cheaper labor.
While wages are lower, this doesn’t tell the whole story. In fact, assembly is only 2% of an iPhones hardware cost.
Today, most iPhones are made in two Chinese cities: Shenzhen and Zhengzhou.
Favorable government policies helped Shenzhen become the electronics factory to the world
… with Taiwanese company Foxconn its biggest employer.
As a result, thousands of companies and millions of workers have moved to the southern Chinese city to be close to the action.
During peak iPhone season, Foxconn hires almost a million people, cutting its workforce to a few hundred thousand during low season.
Such a cluster effect in Shenzhen means that most of the components needed to make a phone, a laptop, or a drone are within a fifty mile radius.
Attempts to recreate this cluster have so far failed. Brazil is the perfect example…
Apple was facing high import tariffs in Brazil and urged Foxconn to make iPhones there.
After securing local incentives, Foxconn built a factory. But very little changed.
Rather than doing lots of high-level manufacturing in Brazil, Foxconn continued to do most of the work back in China
where the supply chain was nearby and parts could be preassembled.
This meant that most of an iPhone was made in China and merely shipped to Brazil for local workers to slot together like Lego.
In the end, the Brazil project failed on two levels - it hired a fraction of the workers the government had expected
and it didn’t attract any of Apple’s hundreds of suppliers.
If an iPhone is to be made in the U.S., it’s more likely to follow the Brazil model, not the Shenzhen model,
which means far fewer jobs and for those workers, making for Apple would be as seasonal as picking apples.
So while the U.S. could one day boast an iPhone "Assembled in America." The question is, does it really want to?