The Allure and the Obstacles: Re-shoring iPhone Production

The notion of relocating iPhone assembly entirely to the United States has resurfaced,fueled by policies advocating for domestic production. While proponents emphasize the availability of American labor and resources, a closer examination reveals critically important hurdles that could make this endeavor both costly and logistically complex. Currently, the vast majority—over 80%—of Apple’s devices are manufactured in China through contract manufacturers like Foxconn. Shifting this massive production ecosystem stateside would require significant investments,time,and policy stability to ensure any chance of success.

Labor Costs: A Staggering Disparity

One of the most significant challenges is the stark difference in labor costs.To illustrate, during the launch of the iPhone 16, Foxconn workers in China reportedly earned around $3.63 per hour. In contrast, California’s minimum wage stands at $16.50 per hour. This wage gap alone could dramatically inflate the price of iPhones. According to Wamsi Mohan, an analyst at Bank of america Securities, this could increase the price of the iPhone 16 Pro by 25%, possibly raising it from $1,199 to approximately $1,500.

This wage gap can increase the price of the iPhone 16 Pro by 25%, from USD 1,199 to around USD 1,500.

Wamsi Mohan, Bank of America Securities

Other analysts predict even more drastic price increases. Wedbush Analysts, including Ives, suggest that a US-made iPhone could cost as much as $3,500. They estimate that Apple would need to invest $30 billion over three years just to move 10% of its supply chain to the US.

Tariffs and Component Sourcing: Additional Financial Burdens

Beyond labor costs,Apple would also face import tariffs on essential components,such as screens sourced from South Korea and processors from TSMC in Taiwan. Mohan warns that if tariffs were fully applied, the price of a US-made iPhone 16 Pro Max could surge by as much as 91%. This would make the device prohibitively expensive for many consumers.

The Skills Gap: A Human Capital Challenge

The availability of skilled workers in the US also presents a significant obstacle. Apple CEO tim Cook has previously highlighted the shortage of technicians in the US as a major concern, contrasting it with the abundance of skilled labor in China. This skills gap could further complicate and delay the process of establishing a robust domestic iPhone production ecosystem.

Past Attempts and Future Prospects: Lessons Learned

History offers cautionary tales. Foxconn’s $10 billion investment in a Wisconsin factory, initially intended to create 13,000 jobs, ultimately failed to produce any core apple products.The facility shifted to manufacturing face masks during the pandemic and currently employs only a fraction of the promised workforce. Similarly, Apple’s previous expansion into Brazil to localize iPhone production faced challenges, with the resulting “Made in Brazil” iPhones costing nearly double the price of those made in China due to the continued need to import components from Asia.

While mass iPhone production in the US appears unlikely, Morgan Stanley analyst Erik Woodring suggests that Apple might consider producing accessories like HomePods or AirTags on a smaller scale in the US to potentially benefit from tariff relief. Apple has also demonstrated a commitment to US investment, including significant projects such as AI server production in Houston and semiconductor component manufacturing in Arizona with TSMC.

Though, the consensus remains that moving the entire iPhone supply chain to the US is a monumental task. This will take years, if possible, Mohan stated, according to CNBC.

Negotiation as a Strategy: A Path Forward?

Apple’s strategy appears to be focused on negotiating with the government, as it successfully did in 2019 when producing the Mac Pro in Texas. This approach aims to maintain competitive prices and avoid substantial tariffs. Ultimately, consumers may need to brace themselves for substantially higher prices for a “Made in USA” iPhone, should such a scenario ever materialize.