Apple has come under heavy criticism in recent months for outsourcing its production line to China, but manufacturing Apple products in the U.S. would take a significant chunk out of Apple’s profits.
The Centre for Research on Socio-Cultural Change, a research group at the University of Manchester, estimates that Apple’s gross profits for the iPhone would drop by about a third if the company manufactured the product in the U.S. instead of China.
Apple currently makes a profit of $452 on each iPhone (a gross profit of 71.9%) thanks to its low labour costs in China, but in the U.S. that number would drop to $293 for each phone (a gross profit of less than 50%).
The research group’s estimates are based on the assumption that Apple would have to pay U.S. workers the average hourly salary for the electronics industry ($21) and that these employees would only work eight hours a day.
Of course, these estimates are purely theoretical and don’t factor in the full costs of moving operations to the U.S. including building new manufacturing plants and recruiting talent, which would likely cut into profits even more. Also, iPhone supplies like screens and chips aren’t manufactured in the U.S., so it would need to have them shipped in, which is expensive and slows things down. And then, there’s the other problem that the U.S. doesn’t have enough engineers to support the manufacture of iPhones.
Anyway, here’s the group’s complete breakdown of the cost of making the iPhone in this country: