Will Apple Supplier Foxconn Make iPhones Stateside?

If Apple supplier Foxconn starts assembling iPhones Stateside, Tim Cook may not need to visit China anymore.

Despite the US stock markets rising since the election of Donald Trump due to expectations that he will inject massive amounts of stimulus into the economy, a notable laggard has been Apple. Like other technology companies with supply chains that are extensive in Asia, Trump's protectionist rhetoric has been of concern to investors. That is, will punitive tariffs be applied to practically all the things Apple sells since most of it is made in the Far East? (Is that now the Fear East?)

The Nikkei Asian Review has an interesting new article suggesting that Foxconn--the largest Apple supplier based in Taiwan and with many facilities in mainland China--is considering setting up Stateside. (Yes, this is the Foxconn of the now-infamous worker dormitory suicides.) The purpose, evidently, would be to get around the criticism that Apple has been "sending jobs" abroad:

iPhones might one day soon carry "Made in America" labels. Key Apple assembler Hon Hai Precision Industry, also known as Foxconn Technology Group, has been studying the possibility of moving iPhone production to the U.S., sources told the Nikkei Asian Review. "Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.," a source said.

"Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns." Foxconn, based in the gritty, industrial Tucheng district in suburban Taipei, and its smaller Taiwanese rival churn out more than 200 million iPhones annually from their massive Chinese campuses.

So it's mainly Apple that is prodding its Taiwanese suppliers instead of them thinking about relocating Stateside. As you'd expect, their concerns mostly deal with increased costs of manufacturing in the US:

Another source said that while Foxconn had been working on the request from Apple Inc., its biggest customer that accounts for more than 50% of its sales, Chairman Terry Gou had been less enthusiastic due to an inevitable rise in production costs.

"Making iPhones in the U.S. means the cost will more than double," the source said. The person added that one view among the Apple supply chain in Taiwan is that U.S. President-elect Donald Trump may push the Cupertino, California-based tech titan to make a certain number of iPhone components at home.

The thing about making iPhones in the States is that they were never made there to begin with, so there's no possible historical counterexample to cite. Moreover, Trump's idea is probably not to compel foreign companies make iPhone parts in the US, but rather American firms. Still, it does show how concerned Apple is about the political entanglements that it may get into with an incoming Trump presidency given his protectionist campaign rhetoric. Although campaign rhetoric may not accurately reflect actual policy, it always helps to be prepared.