Apple (US) makes $520 in profit per iPhone, paying its mostly US staff $12 per iPhone (for 15 minutes of work, i.e. all the HQ work divided by all the phones).
The top supplier companies (all Asia) make $41, and pay their people about $17 (for 2 hours of work).
If you brought the suppliers to produce locally in the US, you’d create an $8.50/hr job (McDonald’s pays more). Or if the job paid more, you’d raise the cost of the phone a bit.
But look more closely at what the supplier does. Sony, Samsung and TSMC are not just cheap labor. They have some unique technology and engineering. TSMC is an advanced manufacturer – so part of their ‘cost’ is HQ process engineering, and part of it is running their factory to spit out chips.
Here’s what TSMC looks like vs. GM (one estimate is ChatGPT and the other one is Grok):
Both companies produce about $1mm of revenue per employee, but look at how the employees are different. The engineering jobs at TSMC won’t come to the new Arizona factory they build, the factory worker jobs will. They don’t use very many of those; it’s only 60% of their cost (which above was about $2/chip).
What onshoring the supply chain to the US would look like is more like “offshoring” and “outsourcing” used to mean — high tech companies from Asia hiring uneducated, low-paid assemblers, call center reps, etc.
This is an image I found on Twitter, which doesn’t quite have it right.
You must be logged in to post a comment.