Thursday, September 6, 2012

Pressure on for Apple to manufacture iPhones in the US

President Obama reportedly once asked Steve Jobs what it would take to make iPhones in the US Jobs replied, "Those jobs aren't coming back." However, Apple has come under increased pressure for its outsourced manufacturing practices, particularly as the US continues to struggle with a weak economy. This led Tim Cook, the current CEO of Apple to admit he would like to move manufacturing to the US and someday even move assembly to the US, but he cited the decline in 'tool-and-die' expertise here in the US as a reason for not being able to do so.

Much of the high tech manufacturing industry has left the US over the years as OEMs such as Apple, Dell and HP increasingly looked to cut costs in order to compete in the cutthroat industry. As a result, over 90% of all high tech goods are now manufactured in Asia. To mitigate against rising costs and risks, OEMs are now investing in manufacturing and sourcing in other locations such as Brazil, Mexico and even returning to the US.

As smartphones and tablets overtake cellphones and laptops, the need for specialized semiconductor chips is increasing to meet the growing demand. As such, Samsung Electronics recently announced it plans to spend $4bn to renovate its Austin, Texas facility to increase production of advanced chips used in smartphones and tablets. Production is scheduled to start in the second half of 2013. Of particular interest, this facility produces chips for Apple's iPhone and iPad.

Avago Technologies and Maxim Semiconductors have also ramped up US manufacturing production. Rumors are that these two companies also provide chips for Apple's iPhone. Another Apple supplier, Corning, manufactures glass for the iPhone in its Kentucky facility.

Another large high tech manufacturer, Intel, announced it would build a $300m research and development facility and invest $5bn to expand its manufacturing plant both in Chandler, Arizona. The 285,000 sq ft building will open the second half of 2013 and will be responsible for packaging of computer chips.

High tech manufacturing appears to be making a comeback in the US – perhaps not on a grand scale; but it is still a welcome sight for the manufacturing industry as a whole as well as for transportation and logistics providers that operate in the US. Even Apple is contributing to this revival despite Steve Jobs stating iPhone manufacturing jobs would not return to the US. It appears some of it has.
For additional insight, check out Ti's latest report: Global High Tech Logistics 2012