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Why the iPhone Can't Be Made in the USA

Geoff Riley

23rd August 2017

Really interesting short video hear on why Apple chooses to manufacture their iPhones in just two centres in China.

The design work for the iPhone is done in the US. However, it is assembled in China.

Many students might suggest that the reason for using China is lower labour costs there. However, whilst labour costs are indeed significantly lower, this does not have a major impact on the production costs. The component cost per iPhone is around $220 per unit whereas assembly costs are just $5

The main reason is that Apple's key suppliers are now clustered in just two key locations. 

Clusters of supply-chain businesses help Apple to keep manufacturing costs down and allow them to sell an iPhone for a price 66% higher than the unit cost.

Why the iPhone Can't Be Made in the USA

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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