With the price of raw materials skyrocketing around the world, it will be harder for Apple to bring the iPhone home.
Delays, shortages and rising prices of raw materials have left beleaguered US manufacturers trying to find new sources of supply at home, leaving them with a dilemma: they can either absorb the extra procurement costs themselves at the expense of profits, or they can pass the costs on to others and push prices even higher.
As Willy Shih, a professor at Harvard Business School, points out, this is fuelling INFLATION in the US, and companies are "boomeranging on themselves". "People are ordering more than they need, which exacerbates shortages."
At present, The Chinese market has the most complete supporting industrial chain and suppliers for iPhone, and the workers needed by Foxconn and other OEM factories can meet Apple's orders. In addition, under the current uncertain situation of the epidemic, it is impossible for iPhone to be manufactured in the US at all.
"Even if we don't take into account higher material costs and other factors, simply manufacturing the iPhone in the U.S. would require Apple to face a huge cost, which they can't accept and there is no way to pass the cost on to consumers," Shih said.
And while bringing manufacturing back to the U.S. is the "buzzword" of the moment, it's too early to predict a recovery in U.S. manufacturing, According to Shih. When companies moved production from the US to China, they could pay for it out of reduced production costs. Now when companies try to do the opposite, there are no savings to cover the cost of the transfer, "[so] we just can't assemble iphones in the US".
American manufacturers are dealing with three crises in their supply chains: paying their own costs, passing them on, and stocking up.