Where are Apple's iPhone, iPads and Macs made? And why doesn't the company assemble its products in the US?
In early 2016, there was a lot of tech-press buzz around then US presidential candidate Donald Trump's eye-catching vow to force Apple to make its computers in the US. He's since raised the stakes with explicit promises of three big new plants on US soil... a promise that Tim Cook has responded to evasively.
(In fairness it's not just Republicans who go in for this kind of thing, even if other politicians might adopt a more diplomatic approach. Less than three years ago Apple was praised by Barack Obama for agreeing to start making more of its Macs domestically.)
Aside from raising questions regarding Mr Trump's motives and credentials, this also made a lot of people curious about the actual location of Apple's manufacturing and assembly plants. How much of an iPad, for example, is actually made in the United States? And how many of the components with in your average Apple devices are produced under the company's own brand? Who really makes the iPhone? How is the iPhone made?
Those are just some of the questions we'll be answering in this article, as we explore the supply chain for a Mac, iPhone or iPad and look at the various places each of these products is designed, built and assembled - and why. Hopefully you, and Donald Trump, will find the answers illuminating.
Donald Trump's Apple plans
In November 2016, Donald Trump spoke directly to Tim Cook, CEO of Apple, to discuss bringing the manufacturing back to the USA. Trump is looking to provide 'very large tax cuts for corporations'. As reported by our colleagues at Macworld US, the Mac Pro is already assembled in the USA, but that is also the lowest-selling product that Apple makes. We don't see Apple moving all of its manufacturing to the USA, but might have to move a part of it during Trump's presidential reign.
After being elected as president, Trump has revealed that he expects Tim Cook to bring more manufacturing to the US, potentially even for the next iPhone. In an interview with Axios, Trump said that Tim Cook has his "eyes open" to making the iPhone in the US.
In July 2017, Trump even told the Wall Street Journal that Tim Cook had made explicit promises. "I spoke to [Cook]," said Trump. "He's promised me three big plants - big, big, big... We're gonna get Apple to start building their damn computers and things in this country, instead of in other countries."
Time will tell, although a few weeks later, at its Q3 2017 financial earnings call, Cook was far less committed to the concept than in the (possibly imaginary?) conversation with the president. Asked to respond on the comments, Cook changed the subject and started talking about the jobs Apple has created in the US - in app development and related industries.
"Let me just take this question from a 'What are we doing to increase jobs' standpoint, which I believe is where it's rooted," Cook said. "We've created two million jobs in the US. We do view that we have a responsibility to increase economic activity in the US, including creating jobs, because Apple could only have been created here."
This isn't just about iPhones: Foxconn is reportedly considering setting up a flatscreen display factory in the US that would cost $7bn. If it goes ahead it could create 30,000 to 50,000 new jobs, though these are plans that have been on the table since 2014. Chairman Terry Gou has said that for the move to be viable Foxconn would need substantial government help in terms of access to cheap land and power.
Apple, Foxconn and the supply chain
Before diving into the origins of individual parts within Apple products, we have to look at the overarching picture: Apple's supply chain, which has come under some scrutiny recently from a report by Amnesty International and Afrewatch that outlines child labour fuelling the manufacturing process of smartphone batteries found in Apple's products.
The biggest difference Apple has from other manufacturers is that it sources its materials and components from other manufacturers that operate throughout the globe. For example, its displays are mainly made in Japan by Japan Display and Sharp, and some are still made in South Korea by LG Display; whilst the Touch ID sensor found in its recent iPad and iPhone models are made in Taiwan by TSMC (Taiwan Semiconductor Manufacturing Company) and Xintec. In fact, Apple's list of suppliers stretches to more than 200 various suppliers located throughout the world.
This brings up a lot of interesting facts about Apple's supply chain, where it has to manage a huge number of suppliers and funnel their work into a single device. This is what makes Apple a fascinating company to research and understand. In order for it to operate economically, it has to source parts from various different countries and continents, manufacture and assemble the parts in another, have warehouses located around the world to supply enough devices for the whole world and finally be able to distribute it to its customers at a reliable speed.
Whilst thinking about the complex supply chain, it's interesting to work out why and how parts from around the world come together in perfect harmony to create one of the most iconic brands of our time.
Which companies make the iPhone - and where?
Let's dive into the individual parts that make up an Apple device. More specifically, let's look at Apple's iPhone line. Here's a breakdown of the components that go into the iPhone 5s and the iPhone 6:
- Accelerometer: Bosch in Germany. Invensense in the United States.
- Audio Chipsets and Codec: Cirrus Logic in the United States (outsourced for manufacturing).
- Baseband processor: Qualcomm in the United States (outsourced for manufacturing).
- Batteries: Samsung in South Korea. Huizhou Desay Battery in China.
- Cameras: Sony in Japan. OmniVision in the United States produces the front-facing FaceTime camera chip but subcontracts TMSC (in Taiwan) for manufacturing.
- Chipsets and Processors: Samsung in South Korea and TSMC in Taiwan. Alongside their partner GlobalFoundries in the United States.
- Controller Chips: PMC Sierra and Broadcom Corp in the United States (outsourced for manufacturing).
- Display: Japan Display and Sharp in Japan. LG Display in South Korea.
- DRAM: TSMC in Taiwan. SK Hynix in South Korea.
- eCompass: Alps Electric in Japan.
- Fingerprint sensor authentication: Authentec makes it in China but outsources it to Taiwan for manufacturing.
- Flash memory: Toshiba in Japan and Samsung in South Korea.
- Gyroscope: STMicroelectronics in France and Italy.
- Inductor coils (audio): TDK in Japan.
- Main Chassis Assembly: Foxconn and Pegatron in China.
- Mixed-signal chips (such as NFC): NXP in Netherlands.
- Plastic Constructions (for the iPhone 5c): Hi-P and Green Point in Singapore.
- Radio Frequency Modules: Win Semiconductors (module manufacturers Avago and RF Micro Devices) in Taiwan. Avago technologies and TriQuint Semiconductor in the United States. Qualcomm in the United States for LTE connectivity.
- Screen and Glass (for the display): Corning (Gorilla Glass) in the United States. GT Advanced Technologies produces the sapphire crystals in the screens.
- Semiconductors: Texas Instruments, Fairchild and Maxim Integrated in the United States.
- Touch ID sensor: TSMC and Xintec in Taiwan.
- Touchscreen Controller: Broadcom in the United States (outsourced for manufacturing).
- Transmitter and Amplification Modules: Skyworks and Qorvo in the United States (outsourced for manufacturing).
As we're able to see, Apple's manufacturing and outsourcing of products is diverse and sprawls across numerous countries around the world. It should be noted that the design, development and marketing work, not to mention the creation of the software, are all done in-house by Apple in the United States. The company remains a huge employer in its home country.
Where is the iPhone made?
And so we return to the original question: Where is an iPhone (or an iPad, or the component parts of any Apple device) made?
The answer is: everywhere. Due to the complex supply chain within each of these companies, the number of countries involved in the manufacturing and even assembly process of Apple's devices is impossibly diverse.
Made in China
The reason Apple sticks "Made in China" on its devices is because the majority of the parts tend to be sourced from China, but they are frequently made elsewhere (in Taiwan, for example). The assembly of Apple's devices is for the most part done in China - which is why we will continue to see "Made in China" despite a lot of these companies, including Apple, creating their designs in countries like the United States.
Looking more closely at the Chinese assembly line, it's also made people question why Apple has chosen to outsource and even assemble its devices outside its domestic territory and choose China as its primary location. The simple answer is: China allows greater flexibility and even has the natural resources to cope with high-demand manufacturing.
Made in India?
There's been no official announcement yet, but there have been so many clues and unofficial comments that it looks pretty much nailed on.
The Wall Street Journal reported that Apple was in talks with India government officials about the move in December 2016; Tim Cook has visited India recently, and announced a Hyderabad office for Maps developers and a developer accelerator in Bangalore; and Bloomberg says Apple will start selling used iPhones in India as part of a deal to set up iPhone manufacture there.
But most clearly, in February 2017 Buzzfeed spotted a pair of tweets by local IT minister Priyank Kharge, later deleted, in which he said he was "glad to announce initial manufacturing operations of the world's most valued company, Apple, in [the Indian state of] Karnataka". It looks like we're on.
It's now been all but confirmed that the iPhone SE will be manufactured in India. Reports indicate that Wistron will be responsible for manufacturing the smaller, entry-level iPhone this April.
"It is Apple's first such venture in India… The demands they have made are for the larger plans of the company to really scale up manufacturing in India," a senior government official told The Economic Times.
Podcast: Apple's India plans
The UK Tech Weekly Podcast team discuss the news of Apple's Indian plans in episode 51, starting at 21.40:
Made in the UK?
While Apple doesn't currently manufacture any products or parts in the UK, a recent visit from the Apple CEO suggests that might soon change. As part of his lengthy European tour, Tim Cook stopped off in London and had a meeting with Prime Minister Theresa May to discuss Apple's continued investment in the UK, especially post-Brexit. According to a spokesperson for May, the chat between the Prime Minister and Apple CEO is said to have been a "very positive and useful discussion".
"It was a meeting with the prime minister. It was a very positive and useful discussion. Apple have made a recent announcement about their investment in the UK and they had a conversation around that and the importance of government and business on digital skills which going forward will clearly be a huge part of the future industry. It was a chance for the prime minister to outline her plans for negotiating our EU exit. It was also a chance for her to reiterate and welcome Apple's investment in the UK."
Following the chat with the Prime Minister, the Apple CEO also met with the Mayor of London about Apple's future in the UK capital. Don't forget, Apple announced back in 2016 that the company is building a new UK headquarters in London's Battersea Power Station, so it has big plans for the UK.
How much does an iPhone cost to make?
We should also look at the cost of manufacturing certain phones (we will quote the figures in US dollars, in order to avoid any currency fluctuation conversions).
According to research firm IHS, the iPhone 6s Plus costs Apple $236 to manufacture, while it previously retailed at over three times the price at $749 for the 16GB model. What's even more interesting to note is the extra storage found in the 64GB model costs Apple around $17 extra to make, while it charges its customers an extra $100 for the extra storage space.
In the UK the iPhone 6s Plus 64GB could previously be found for £599. It has since been removed from sale following the iPhone 8 launch, though you can still get a 32GB version for £549 and 128GB for £649.
On 4 April 2016, IHS also released the cost estimate for the iPhone SE, which comes in at about $160 with manufacturing costs added, whilst the retail price sat at $399 (£379 in the UK, but now reduced to £349).
In the light of the recent iPhone 8, iPhone 8 Plus and iPhone X launches, Apple has reduced the prices of its older iPhones, and removed 64GB variants from sale.
The new iPhone X is Apple's most expensive iPhone to date, starting at $999 or £999 for 64GB ($1149/£1149 for 256GB). But according to a new report it is estimated that the iPhone X costs just $412.75 to make. That's a profit margin of nearly 60 percent for Apple.
This price takes into account - among other components - the display ($80), A11 Bionic chipset ($26), Qualcomm modem ($18), FaceID sensor ($25) and NAND memory ($45). It does not include the company's other overheads, of course, such as employee wages, marketing and advertising.
Apple vs Samsung
It's interesting to understand the cost of the manufacturing process, as when compared to other manufacturers like Samsung, who make a lot of Apple's internal parts and manufacture a greater percentage of components within their own devices; it costs Samsung more to build the Galaxy S6 Edge 64GB over the Apple iPhone 6 Plus 64GB model. The Galaxy S6 Edge 64GB used to be found for around £500 on Amazon.
This all goes to show how complex and yet how successful Apple is as a logistical engine, keeping down costs and managing a vast and complicated supply chain with links around the globe.
It is known as one of the most talked about brands in the technology space and has an ever-increasing popularity with investors. Apple is quite simply one of the most successful companies of our times, and yet it barely manufactures its own products and still manages to sell them for a higher price, despite often featuring slightly lower hardware specifications.