Why The U.S. Fell Behind In Phone Manufacturing

I worked and managed manufacturing electronics and semiconductors for 30 years. I’ve visited China on manufacturing activities multiple times. I became management and can see the financial statements. In the 1990’s and early 2000’s, labor cost in Asia was the driver. This drove supply chain to go to Asia, even the most complex manufacturing and less labor intensive like chip manufacturing. So in 2000’s it’s supply chain as driver. In the end, it’s profit margin that is driving the companies to manufacture in Asia, particularly China. The US and Europe have given up even their low labor intensive manufacturing capability (chip foundries) and even design capability (engineers are cheaper in Asia). They could still make a profit by manufacturing in the US, but that profit may be only 10% compared to 30% if made in Asia (mostly China). So the root cause is profit MARGIN, not profit.

Another factor they left out or withheld is profits tied to labor costs. The stockholders want their profit gains and CEOs want their insane pay and bonuses.

They forgot to say that although the minimum wage is $7.25 it's long overdue for a doubling and no one is actually going to work for $7.25 in the US anymore anytime soon.

Can you imagine a cellphone made in the US? "I'd like the cheap base model please" "sure, that will be a $9800 down payment please and only $199/mo for 60mos"

Wow, that made in USA Librem 5 with its 2005 looks (720p screen and chunky af) and specs costs $2000. 🤯🤯🤯 That is why we don't have manufacturing in the US.

Because China gives the best Skill-to-Cost ratio and a complete manufacturing ecosystem.

America as we know it is finished. All indications point to 2023 being a year of severe economic pain across the country. Put that money to work right away to make it grow. I knew I had to make an investment. I never imagined that a few thousand dollars per month would add up. However, it is. I've made around $600,000 since 2020.

They say that labor costs are too high in the US, but never mention that it's still profitable. Companies like Apple are awash in cash from exploiting cheap labor. They just don't want to give that up, even if it hurts the country that birthed them to continue. To Tim Cook: Smartphones may have never been a big "made in USA" product, but consumer electronics ABSOLUTELY were. It all ended when companies started contracting the manufacturing side out to Asia (primarily) in the late '60s-early '70s. It was cheaper, everyone was doing it, and they all got addicted to the higher profit margins. What would happen when working-class wage averages started to plateau and drop wasn't their concern. Now we have inner-city blight, gang violence, political unrest, crime and rampant pessimism to show for it all. If something isn't done soon, we're going to have full-on class warfare. Because who has done exceptionally well because of all this? Companies like Apple, Alphabet, Amazon, Walmart etc. and the fabulously wealthy people that run them.

people in the US don't even want to sell burger at McDonald , i can't imagine them sit at factories assembling phones

$2000 for a phone with specs of a less than $100 Android phone (Redmi 11a) shows that's it's a 20 to 1 cost of manufacturing electronics USA v China.

For many decades Asia been more smarter at tech than us as in the general population. They grow up in tech friendly environments and by the time they hit teenagers they are smart to write codes.

Labor cost in America is ridiculously high compared to China or other industrious developing countries, your Iphone could cost as high as 5000 dollars per unit if it is manufactured in the US.

It's really too costly for everything in America. I remember when I was traveling to US right before the pandemic. I had to spend USD 60 for a 1gb internet sim card, slow speed and unshareable hotspot too, and I had to sign some weird documents. The same year I was in Laos, so called 3rd world by US, internet was high speed, cost 1/10th the price, unlimited internet, shareable, no document.

I remember my brother would assemble Mac computers by hand in Colorado Springs back in 96. He loved that job.

i was just literally wondering about this today. thx cnbc.

When it comes to Apple: They even gave up repairments in the US

China has pool of supporting industry and expertise which you can not find anywhere else.

Expensive phones would be more expensive if Made In USA

Is important to add that: Most components on smartphones are not produced in the US because there is just not enough know-how on hardware manufacturing development, while Asian markets are better integrated. Samsung and LG are in Korea, they have a huge experience on electronics manufacturing and they’re also part of the supply chain. Foxxcon on Taiwan basically dominates the chip supply chain because American hardware developers like intel cannot compete anymore (they are stuck on 11nm chips while Samsung and Foxxcon are manufacturing 5nm chips which are more powerful and efficient). Even China has more competitive private companies manufacturing 7nm chips. And while Asia keeps developing itself and transforms into a high income region, the amount of electronic consumers increases as well and it just makes sense for international tech companies to manufacture close to their new economic epicenter.

Thank You. Informative, short message