It looks like Apple Inc. (Nasdaq: AAPL)'s decision to manufacture in the US is already having the desired effect. Bloomberg reported today that Apple’s leading EMS partner, Foxconn Electronics Inc. , is also considering expanded US production.
Several news outlets say the decision is being driven by the practicalities of assembling products near the point of consumption. Apple will be building one of its Mac products in the US; devices that are bigger and bulkier than its phones and tablets.
Transportation and logistics costs in overseas shipments have been increasing, as have Chinese wages. Foxconn is the world’s largest EMS provider, and has a significant presence in China. The company recently announced it would replace some Chinese workers with robots in order to save costs. (See: Foxconn’s Solution to Labor Unrest.)
There is undoubtedly a PR aspect as well. Apple has been excoriated for its partnership with Foxconn, which reportedly uses child labor; forces workers into 24-hour shifts; underpays employees; and houses workers in crowded conditions. Apple hired a third-party labor watchdog to audit Foxconn plants, and Foxconn has since increased its wages and admitted to hiring underage staff.
Whether Apple’s move signals the rebirth of US manufacturing is up for debate. Apple’s presence in the US will be small: It’s investing $100 million in manufacturing. Although Foxconn dwarfs all of its competitors, its reliance on low-cost labor is admittedly its greatest edge. It’s very likely that Foxconn will use automation in its US factories to remain cost-competitive.
Here’s what we know so far about Apple’s plans. IHS, in an email brief this morning, reports:
Apple is apt to shift only a small percentage of its total production to the United States next year. At the same time, the company is a relatively small player in the global PC market. With the vast majority of PCs now being produced in Asia by contract manufacturers, Apple’s move is unlikely to spur a major shift in production from Asia to the United States.
In the global PC market, Apple is ranked No. 6, with a 5.8 percent share of global shipments in the third quarter of this year, as presented in the attached table.
Given Apple’s extensive overseas production, the total percentage of the company’s cost of goods sold (COGS) shifted from China to the United States in 2013 is prone to be very small. If Apple only moves production of one segment of its Macintosh product line, as reports indicate, the total shift in COGS could amount to less than 1 percent in 2013. Still, the move has some precedent in other circles.
Interestingly, Apple is not the first OEM to announce it will be moving some PC production from Asia to the United States in 2013. Chinese computer-maker Lenovo Group Ltd. in October said it would start making PCs in North Carolina next year.
Yes, that is something that is good to notice. Most of the time there is a reason why one product is more expensive than the other, i.e. an Apple tablet vs. and Android tablet, apps is one of those reasons-
"I say it's a matter of price. What is your experience after having sold both?"
I sold more Apple, both in terms of number of units and in terms of dollar amounts. I noticed that are many apps for Apple that simply did not seem to be available for Android, including a number of programs for special needs children.
Yes. I am more familiar with iOS apps, and for that I can speak of the quality of them. Adeniji said that Android has more apps, and more free apps, and that was one of the reasons people buy them more. I say it's a matter of price. What is your experience after having sold both?
-Susan
Edit: Yay! This is the first comment on EBN in 2013. :)
I don't know if Android OS has more apps than iOS, or the quality of them. I do know, though, that iOS has plenty of quality apps (250.000?), many of which are free. Once again I am going to tell than quantity is nothing without quality.
Adeniji, I don't think any importance in that. They already implemented various measures to protect the IP rights and integrity. But I think it can give a good impact to US economy because the currency is rotating in US market with in a loop.
Bolaji, that's interesting. So far I though majority of sales and revenue are from different US states and Canada. But in most of the Asian countries and China, Apple products are not so popular and Samsung products are so common in market.
Many people are begining to embrace the android devices and then the android devices are offering more for less. This is a major source of advert for android devices, for example you could get an android phone with so many applications and even features like tethering for less than $65.
Susan, There are numerous devices that measure up to the iPad and may even be better. Many don't know this but Apple's No. ranking in tablet PCs is being challenged by Samsung and it would most likely be surpassed by Android devices in the next few years.
@susan, yes, I believe lower price is a reason, other reasons are good battery life and that android OS seems to have more and free applications than iOS.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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