Another political-corporate scandal in the USA
Trump threatened to impose tariffs of 25% on Apple products if Tim Cook does not relocate production to the USA, at least for the volume sold in the American market. Tim Cook himself has mysteriously gone quiet.
Is Tim Cook's school failing? Trump's advisors whispered that Tim Cook is fooling the president or that Trump suddenly had an epiphany?
Tim Cook displayed exceptional skill when he managed to sell Trump a fake deal worth 500 billion, without changing the cost structure by a single point, not paying a single extra dollar in expanded investments in the USA, while receiving preferences for preferential tariffs on almost all his imports to the USA. A deal that will go down in history as a quick and efficient way to 'fool the President of the USA'.
But why does Tim Cook resist relocating production to the USA so much?
It's not just about the cost or qualification of the workforce; a much more significant and fundamental barrier is the related and integrated manufacturing infrastructure and supplier clusters.
Apple relies on a vast, geographically concentrated network of hundreds of suppliers of specialized components (screens, chips, cameras, cases, small connectors, etc.). These suppliers are located in close proximity to each other and to assembly plants (like Foxconn, Pegatron). This ensures incredible speed, flexibility, and efficiency in the supply chain.
Recreating such an ecosystem in the USA would require decades and astronomical (initially unrecoupable) investments not only from Apple but also from each of these suppliers. Many components are simply not produced in the USA, and convincing their suppliers to move and establish production from scratch is an impossible task.
The actual manufacturing core is China, Taiwan, Japan, and South Korea, which account for over 85-90% of suppliers and almost the entire high-precision engineering. India and Vietnam are still acting as 'peripheral' assembly hubs without a full-fledged ecosystem layer of components.
A manufacturing cluster is when about 80% of key components are concentrated within a radius of 60-80 km around assembly lines, like Foxconn/Pegatron.
Creating, optimizing, and establishing logistics for the entire supply chain requires an immeasurable amount of time and money, and importing to the USA incurs additional costs, even assuming that this part of imports would be exempt from expanded tariffs, plus a decrease in speed and flexibility.
The second reason is the established production capacities and the ability to mobilize hundreds of thousands of skilled workers in the shortest time to launch new products. There is no comparable workforce in the USA (experience, knowledge, discipline, hard work).
Deploying production in the USA means losing access to decades of accumulated experience and engineering skills of Asian partners in the mass production of complex consumer electronics. They have a unique ability to quickly reconfigure production lines and implement complex technological processes.
About the difference in wages – it's banal, I won't even break it down.
In the USA, a small number of facilities (Flex Austin, Amkor, Broadcom, Corning) are responsible for R&D, packaging, and niche assembly of Mac Pro, but not for mass electronics. Deploying mass production is not feasible within reasonable costs.
Relocating production is not just about building a factory. It is a multi-year, extremely complex process involving the establishment of supply chain logistics, optimization of production lines, including from the perspective of training the appropriate personnel.
The USA has none of this and will not have it. It's expensive, inefficient, and uncompetitive. Competing with Asia is simply not possible.
Without a doubt, Tim Cook will sabotage the process of relocating production. He understands all the modern specifics of manufacturing and the balance of costs.
I expect Tim Cook to promise to build 'plantations of endless factories in the USA', but without laying a single brick.
