Trump can bluster and bluff all he wants, but iPhone manufacturing isn't coming to the US
- Reference: 1748363776
- News link: https://www.theregister.co.uk/2025/05/27/trumps_iphone_manufacture/
- Source link:
In response to Trump's [1]statement last week , analysts from Morgan Stanley published a research brief on Tuesday that concluded Apple is unlikely to respond to Trump's latest tariff threat in a way that will please him.
The report, provided to The Register , concluded that the original [2]145 percent tariff imposed by Trump on certain imports from China last month might have made Apple budge on the matter, but since the President [3]lost his international staredown and promised to reduce that rate, the economics no longer make sense for Cupertino.
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According to the Morgan Stanley number crunchers, an iPhone manufactured in the United States would be at least 35 percent more expensive than one made overseas when accounting for tariffs on single-source components still made in China and higher US labor costs. That means a $999 iPhone would be $1,350 - at a minimum - if Apple wanted to retain a similar gross margin.
[A] 25 percent tariff will have no effect; it will need to be many times higher to compensate for the local production cost
With a 25 percent tariff on iPhone imports from China or India in place, on the other hand, Apple would need to increase prices on iPhones by only four to six percent globally to keep profits up.
Canalys smartphone and IoT analyst Runar Bjorhovde agreed with Morgan Stanley's analysis in an email to The Register . "[A] 25 percent tariff will have no effect; it will need to be many times higher to compensate for the local production cost," Bjorhovde told us.
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In other words, nice try, Mr. President, but those threats will need to be more serious.
It's not just retail margins standing in the way
In further [7]comments on LinkedIn looking at what it would take for Apple to onshore iPhone production for the US market, Bjorhovde also agreed that there's a lot more to the picture than tariffs.
If Apple decided to cave to Trump's demands, it would have to build new US factories, train a bunch of new workers to manufacture iPhones, and deal with "surging assembly and testing costs" in addition to the aforementioned labor and component costs, said Bjorhovde.
Factor all that in, says Morgan Stanley, and we're looking at a minimum of two years before Apple could build, equip, staff, and start assembling iPhones at a new US-based greenfield plant. Apple would need more than one factory to meet US iPhone demand, Morgan Stanley predicted, and would have to find more than 100,000 people "skilled in highly precise tooling equipment" to meet peak-period demand.
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"Both of these facts present significant challenges in time to market," Morgan Stanley said.
More realistically, the investment bank said, it would take four or more years to get production going if we consider the case of TSMC's [9]new Arizona chip fab . That facility began construction in 2020 and only came online late last year, Morgan Stanley noted.
If an Apple commitment followed the same timeline, the first US-built iPhone might not reach consumers until after President Trump leaves office
"If an Apple commitment followed the same timeline, the first US-built iPhone might not reach consumers until after President Trump leaves office," the bankers concluded - perfect timing for the next White House occupant to take credit.
Bjorhovde is even less optimistic.
"I think we will look at a three-to-five-year investment minimum to get any production capacity to the US," the Canalys analyst told us, and even that timeline comes with a number of caveats. Most notably, Apple would have to find a way to import iPhone manufacturing experts from China to the United States "backed by an investment from, for example, Foxconn," Bjorhovde said.
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Let's not forget that Trump can't simply wave his hands and implement targeted tariffs, either. Morgan Stanley pointed out that smartphones are currently exempted from Trump's various on-again, off-again tariff decrees, giving the US just two options to enact Trump's weekend decree. One option is through the International Emergency Economic Powers [11]Act , which gives the President the power to levy tariffs if a national emergency is declared. The second comes through a section 232 study, which seeks to establish national security risks of manufacturing stuff outside the US.
"Both options face legal headwinds," Morgan Stanley said. "A Section 232 investigation could have firmer standing given the administration is [12]already evaluating semiconductor tariffs via this route."
[13]Trump threatens to add formal Apple Tax on top of the 'Apple tax'
[14]Trump thinks we can make iPhones in the US just like China. Yeah, right
[15]Trump says he has a problem if Apple builds iThings in India
[16]Siri? Will tariffs hurt Apple? Tim Cook says brace for a $900M whack, for starters
Will the Cook still crumble to political pressure?
Steve Jobs [17]said it , we've [18]said it , and we'll say it again: iPhones just aren't ever going to be a made-in-the-USA product. That doesn't mean Apple won't try to do something else to appease Trump, though.
If Apple ignores Trump's 25 percent tariff and declines its accompanying demand to bring iPhone manufacturing to the US, "Tim Cook's status with the current administration [will] deteriorate," Morgan Stanley predicted. Apple may also face further tariff threats, the bank predicted, which could further worry [19]spooked investors.
Apple has already pledged to [20]invest $500 billion in the US over four years, spanning areas like AI, chips, and workforce training, but not iPhone manufacturing, signaling it's still willing to play ball with Washington. Morgan Stanley predicted it might do more that doesn't involve messing with the margins on its [21]top product .
Morgan Stanley believes it would make sense for Tim Cook to announce reshoring some "smaller products," suggesting Macs, HomePods, AirTags, and other products could be made in the US with much less investment.
It's "not as symbolic as the iPhone," Morgan Stanley said, but it would be a win for both Trump and Apple. The former "gets the largest electronics company in the world to commit, publicly, to new US production," the bank noted, while Apple reduces "geopolitical threats at home."
Apple didn't respond to questions for this story. ®
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[1] https://www.theregister.com/2025/05/26/us_apple_eu_tariffs/
[2] https://www.theregister.com/2025/04/14/tech_tariff_update/
[3] https://www.theregister.com/2025/04/23/us_china_tariff_reduction_plan/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aDY19lU4pQx-mygyLkneHQAAAdg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aDY19lU4pQx-mygyLkneHQAAAdg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aDY19lU4pQx-mygyLkneHQAAAdg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.linkedin.com/posts/runar-bjorhovde_thought-experiment-how-high-does-us-smartphone-activity-7331678738054541313-eNTt/?utm_source=share&utm_medium=member_desktop&rcm=ACoAABYWhO0BP1XQptfwLceVUk8zsSSklwTOYbA
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aDY19lU4pQx-mygyLkneHQAAAdg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2025/03/04/tsmc_trump_arizona_investment/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aDY19lU4pQx-mygyLkneHQAAAdg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.congress.gov/crs-product/R45618
[12] https://www.theregister.com/2025/04/15/commerce_dept_chips_tariffs/
[13] https://www.theregister.com/2025/05/26/us_apple_eu_tariffs/
[14] https://www.theregister.com/2025/04/09/iphones_manufacture_unlikely_in_us/
[15] https://www.theregister.com/2025/05/16/trump_apple_india_warning/
[16] https://www.theregister.com/2025/05/02/apple_q2_2025/
[17] https://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html
[18] https://www.theregister.com/2025/04/09/iphones_manufacture_unlikely_in_us/
[19] https://www.barrons.com/articles/apple-stock-price-trump-tariffs-iphones-059710eb
[20] https://www.theregister.com/2025/02/24/apple_us_manufacturing/
[21] https://www.apple.com/newsroom/2025/05/apple-reports-second-quarter-results/
[22] https://whitepapers.theregister.com/
Re: "want to see if the President follows through on cutting my electric bill in half"
Of course he will!
Until now he has a perfect score of kept promises: inflation ended, war in Ukraine ended, America is great again, there are no more swamps, etc.
For more on that, [1]https://apnews.com/projects/trump-campaign-promise-tracker/
[1] https://apnews.com/projects/trump-campaign-promise-tracker/
Re: "want to see if the President follows through on cutting my electric bill in half"
In fact he has also kept his promise on egg prices, as long as you take the price of a egg fully cooked with beautiful cheap coal power.
Re: Lots of stuff, not just Apple
Based on precedent -- what happened in previous administrations -- the most likely outcome is that there will be a lot of noise and a fair bit of thrashing around with nothing actually getting done except an explosion of debt and an overall decline in our capabilities. The government will change and the incoming administration will attempt to fix the resulting chaos with a greater or lesser degree of success. They will be lambasted because of deficits, employment policies and stuff -- in other words, failing to fix the problem overnight -- and so the pendulum will swing right back. "Rinse and Repeat".
The one time when things seemed to stabilize and get on a decent track -- we were building stuff, the current account deficit turned surplus etc.-- during the Clinton administration there was a media obsession with a 'little blue dress', a change of administration under less than ideal circumstances and a quick reversion to massive deficits, lax banking rules and so on. The result was a huge run up in asset prices (houses went from 'expensive' to 'unaffordable luxury items', for example)** and we ended up almost bankrupt.
So I'm not that optimistic about the present Administration. I think they're going to prove to be a total shambles, bringing new levels of corruption and lawlessness to politics while covering for the introduction of autocratic rule that will not only entrench this mess but squash any opposition to it.Arms dealers, speculators and gold toilet vendors will probably do very well, the rest of us not so much. Meanwhile the rest of the world will just carry on without us.
(**Actually it was just a de facto devaluation of the currency.)
Re: Lots of stuff, not just Apple
"Anyway, it's a fun ride and do want to see if the President follows through on cutting my electric bill in half in his first year back."
That's an empty promise and should be seen as such. It's not as if the electricity company is making 200% profit and can halve costs to customers. In my last two bills, there were notifications of applications to raise rates with the public utilities commission. The only way to cut my bill down is to generate the power myself so I have been investing in small solar projects to run things such as the chest freezer and some of the HVAC. If I come across a small and cheap solar panel that will run my little hydroponics grow system, that will come unplugged as well since it barely breaks even. Lettuces are really cheap in the market. The only bonus is being able to snip off tonight's salad to have something maximally fresh. I also use it for speed starting basil and cilantro plants.
Remember when the pig-buggerers were all up in arms about the government “picking winners and losers”? I guess it’s ok when Dump does it.
Not very accepting of equally valid, alternative lifestyles, today are we?
Apple's new factory
I'll post it again: https://www.geekculture.com/joyoftech/joyarchives/3168.html
Re: Apple's new factory
Tim Apple was always a big Blazing Saddles fan.
Obvious solution
1, Apple buys Fox news
2, AppleNews announces iPhones made in USA
3, AppleNews announces people should vote for Tim Cook
Re: Obvious solution
It's kinda sad. I sat here and thought about it. As much as I despise Apple, Tim Cook would be a better candidate than we've had (on both sides) in 25 years.
I'd vote for him, as it stands.
"If an Apple commitment followed the same timeline, the first US-built iPhone might not reach consumers until after President Trump leaves office,"
That's very optimistic. (I'm talking about King Donald leaving office in four years - not the iPhone timeline.) Florida Man is there till the devil calls in his marker.
Surely the most obvious obstacle
Is the total lack of any stability in US government.
Without that, who would spend a dime on a return in 5 years ?
Apple's $500 billion pledge
Had nothing to do with "playing ball" with Trump. They announced a similar $430 billion investment plan in 2021 after Biden took office, and a $350 billion investment in 2017 when Trump took office.
I think they've figured out it is best to call out all the money they are planning to spend at the start of an administration so they're clear on how much Apple is contributing to the US economy and hope that means they'll look elsewhere when investigating antitrust issues. Note that $500 billion is over the next 4-5 years and includes ALL spending in the US, not just R&D or capital projects. It includes Tim Cook's salary, the salaries for Apple Store employees, and even the weekly invoice to the custodial company that empties the wastebaskets in their spaceship HQ building.
Not going to happen
The orange cockwomble can tweet away all he likes.
But it will take way too long to build an iPhone factory, then train 2000 people or so to work it , plus import the suicide nets (and the various other machinery needed)
Its all a show for his fox viewers.... but saying that... if you unbox the iphones in the shipping ports, and then rebox them, you can put 'boxed in the USA' on them and that will be enough to swoon the maga crowd
Re: Not going to happen
Morgan Stanley said '100,000 people "skilled in highly precise tooling equipment" '
I don't think the Indians or Chinese workers are born with those skills either, training is a constant factor.
Re: Not going to happen
"I don't think the Indians or Chinese workers are born with those skills either, training is a constant factor."
True. If Apple is only one of a very few companies hiring/training for those skills in the US, there still won't be that many people ready to do those jobs. A couple of my "girls" cycled in/out of my manufacturing company as they added to their family and it was tough to get new people in and up to speed to fill the gap. I imagine that it would be even more difficult today as I wouldn't allow workers to be fiddling with their phones while on the clock.
increase prices on iPhones by only four to six percent globally to keep profits up
So still cowering and unable to let the US see the real cost of the tariffs themselves, but spread the pain worldwide?
Will the Apple Stores remember to itemise the receipts properly: you have just paid x to Apple's profits, y in your nation's sales tax to help fund your own government - and z to directly help fund Trump's government and prevent your US sales dropping any further?
Lots of stuff, not just Apple
I think the idea is that in a "single term" you can bring back the industrial revolution from decades ago is false.
I think that diversifying supply chains and some "security" (high cost) items would a better focus. But, we'll see. Even if "focused", not sure if a single term does it.
Some of President Trump's strategies (even at his lightspeed pace) would be more realizable if "two back to back terms".
Anyway, it's a fun ride and do want to see if the President follows through on cutting my electric bill in half in his first year back. And, after his term, if we get the "polar opposite" (Democrat), no telling what will happen then. May need to redefine "fun".