Prospective iPhone buyers could be wondering what would be the cost of an iPhone if it's manufactured in the US, especially after the President-elect Donald J. Trump has proposed to build all Apple products in the country and source the necessary components from outside.
Trump has hinted at offering a very large tax break for all American corporations that build products locally or bring manufacturing units into the country. There is no clarity on what these tax-waiver benefits would be or how they would affect Apple's pricing policies for the next-gen iPhones.
On multiple occasions during his presidential campaign, Trump tried convincing corporate companies to bring their manufacturing units into the US from Asia. However, it is not yet known how it would affect the iPhone production cost and thereby influence the retail pricing offered to consumers.
Foxconn, who is Apple's chief component supplier, has already evaluated the cost of building devices in the US. It is now ascertained that the cost of iPhones "would more than double" if all components were sourced from outside and assembled or everything was built from scratch in the US.
The estimated cost of making an iPhone with the existing setup is around $220, while the above model for creating iPhones will propel the manufacturing cost to $600 per unit approximately. Given Apple's premium pricing and high-profit margins, such a move would send the retail price of an iPhone shooting upwards of $2000.
On the contrary, a recent review analysis by MIT Technology proposes a new approach to the pricing model of an iPhone made in the US, wherein the production cost of the device is estimated to rise by around 5% when all necessary components are sourced globally. In other words, it would see the retail price of an iPhone being hiked by $30 to $40.
According to IHS Markit Technology's Chief Analyst Dan Panzika, the US would find it difficult to match the workforce estimate required to build iPhones in the country. For instance, the workforce estimate for production of iPhones in China is around 1, 50,000 while the combined workforce of all people at GE, GM and Ford falls short by 20% of the total workforce at the four Foxconn factories.
Consequently, Panzica believes that the US will face major infrastructure problems in manufacturing electronics locally as everything needs to be built from scratch, especially with smaller workforce at their disposal in contrast to Foxconn's setup in China.
[Source: Business Insider]