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Could Apple Really Manufacture iPhones In America?

Friday, November 18, 2016 9:44
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(Before It's News)

According to a report from Japanese publisher Nikkei Asian Review, tech titan Apple Inc. (NASDAQ:AAPL) is actually considering making its flagship iPhones on American soil.

The report comes in response to Donald Trump’s surprise election last week. During his campaign, Trump noted several times that he would attempt to bring manufacturing jobs away from China — where they’ve been outsourced for several decades now — back to the United States.

One of Trump’s specific targets was Apple, whose iPhones will soon be made in America, Trump pledged. How he plans to force Apple and other companies’ hands are still unclear, but a massive 45% tariff on goods made in China is reportedly on the table.

Most analysts greeted Trump’s bombastic claims with skepticism, but it appears Apple may actually be considering moving some of its manufacturing to America after all.

Reportedly, the company has asked two of its main assemblers to think about moving operations into the United States:

“Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.,” said the Nikkei Asian Review, citing a source. “Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.”

Apple, Foxconn, and Pegatron are all staying silent on the issue for now, but the situation is worth monitoring for investors. Apple depends on massive margins for its hardware, and a big part of those margins comes from making the devices overseas, where labor is incredibly cheap.

So whether Apple moves production to the U.S., or it simply eats the tariff, such huge margin pressure could lead to big effects on the company’s bottom line.

Apple shares were mostly flat in Friday morning trading at $109.93. Year-to-date, AAPL has gained 4.43%, versus a 7.33% rise in the benchmark S&P 500 index during the same period.

AAPL-2016-11-18

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