How & Where iPhone Is Made: Comparison Of Apple’s Manufacturing Process

 How & Where iPhone Is Made: Comparison Of Apple’s Manufacturing Process

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The iPhone Saga
“Designed in California, Assembled in China”

Follow how an iPhone is made and see where the US fits in the global value chain

Apple Around the World

Location and no. of Apple suppliers per country
China 349
Japan 139
USA 60
Taiwan 42
South Korea 32
Malaysia 29
Philippines 24
Thailand 21
Singapore 17
Germany 13
Vietnam 11
Mexico 7
Indonesia 6
Israel 6
France 5
Czech Republic 5
Belgium 3
Italy 3
Ireland 3
UK 3
Brazil 2
Costa Rica 2
Austria 2
Netherlands 2
Canada 1
Portugal 1
Spain 1
Morocco 1
Puerto Rico 1
Malta 1
Hungary 1

(as of 2014)
$4 Extra cost if iPhones are assembled in the U.S. Apple’s manufacturing strategy is motivated by scalability and supply chain risk rather than cost

$600M Additional labor cost for reshoring iPhone production in the US

35% Tax on profits Apple would have to pay for US-made iPhones vs. 2% on overseas profits

“If Apple brought iPhone manufacturing to the US it would cost them $4.2 B” – Tim Worstall, FORBES

Apple’s global workforce at a glance

Hit hard by issues surrounding its Chinese manufacturing partners, Apple has implemented a Supplier Responsibility program.

451 – Audits performed in Apple’s supply chain
(51% increase since 2012)

1.5 M – Workers participated in labor rights training

60 – Maximum weekly work hours allowed

1M – Number of workers whose weekly overtime hours are tracked

280,000 – Workers that received self-improvement training

Designed in the USA

US operations still figure much in the iPhone business

The Apple Supply Chain

Design & Development – USA
Sourcing – USA, China, Asia, Europe
Manufacturing – China
Warehousing – USA
Distribution – USA, Global
US Jobs Created or Supported by Apple (as of 2014)

Full-time employees: 50,250 8.4%
Apple supply chain: 257,000 42.9%
iOS app economy: 291,250 48.7%

iPhone 6 Boosts US Production

GT Advanced Technology (Mesa, AZ)
Product: sapphire crystal components
Has ordered additional 420 sapphire crystal furnace units to bump up production by 84 to 94 million screen covers

Samsung (Austin, TX)
Product: A series chips
Despite strong competition from TSMC of Taiwan, Samsung is said to be manufacturing A8 in its US plant for iPhone 6S on top of its A9 plan

GlobalFoundries (Malta, NY)
Product: A series chips
The company is Samsung’s partner to produce A chips possibly for iPhone 6S in 2015, expanding its Fab 8 facility in its New York plant.

Companies that Ramped up US Operations for recent iPhones

Avago Technologies (Fort Collins, CO)
Product:RF chips
Expanded its US capacity with $130 million worth of equipment

Texas Instruments (Richardson, TX)
Product: chips
Ramped up production at its chip facilities, including in Richardson.

Fairchild Semiconductor (San Jose, CA)
Product: chips
Wafer plants in the US operating at full capacity

Maxim Integrated (San Jose, CA)
Product: chips
Started last year a multi-year investment in its American facilities.

Corning out?
Corning (Harrodsburg KY), makers of Gorilla Glass for Apple devices including previous iPhones, bashed sapphire as 10x more expensive and 1.8 times heavier. Initially rumored to feature a sapphire crystal cover, iPhone 6 still uses glass but Apple isn’t confirming who’s the supplier.

iOS 8, biggest iOS release ever
Touted the world’s most advanced mobile operating system, iOS 8 is developed by the Cupertino team. It’s the first iOS without long-time Apple designer Greg Christie who had a falling out with fellow designer Jony Ive last year over iOS 7.

Made in Asia

TSMC is top chipmaker but may be ditched too soon
For the first time, Samsung is not supplying the A chip to iPhone. TSMC (Taiwan) is lead supplier of A8 for iPhone 6. But Samsung may be back too soon for TSMC, supplying A8 for iPhone 6S and A9 for future iPhones.

Major Asian companies get iPhone 6 job orders

LG Display (South Korea)
The largest display panel supplier for iPhone 6

Japan Display (Japan) and Innolux (Taiwan)
Also has major orders for iPhone 6 screens

Sony (Japan)
Supplies both front and rear cameras

TDK (Japan) – major Apple supplier for inductor coils

Toshiba (Japan) and SK Hynix (South Korea) to supply storage at 16GB, 64GB, and 128GB

TSMC (Taiwan) to supply Touch ID sensor for iPhone 6; the fingerprint technology debuted in iPhone 5S

Catcher Technology (Taiwan) needs to catch up
The chassis supplier is fixing glitches in its casing, which may take 2-3 months; meanwhile, Apple switched to Jabil and Foxconn to meet the launching date

Asian economies get boost from iPhone 6

The iPhone 6 rollout has created a ripple effect in the economies of Japan and Taiwan, which supply microprocessors, camera lenses, and display for iPhone 6

5%
Increase in Japanese electronics exports
$1.17B
Japanese machine tools ordered by China for iPhone 6 assembly

8.6%
Increase in Taiwanese electronics exports
$26.9B
Projected revenue for Taiwanese suppliers of iPhone 6

Fabless US and Asian Suppliers also Outsource to Asia

Many US-based suppliers also subcontract iPhone component orders to companies in Japan, Taiwan, and South Korea, which outsource fabrication to other Asian countries with cheaper labor or greater ability to scale up production. That’s how everything ends up being “Made in China.” Singapore, Malaysia, Thailand, and the Philippines get a lot of the action, too, mostly as suppliers for back-end components.

Provided by Europe, No More?

French-Italian STMicroeletronics provided the gyroscope in past iPhones, but may lose it to InvenSense, the San Jose, CA-based company

NFC finally in iPhone 6
Dutch company NXP is said to be supplying the short-range wireless chip for iPhone 6 that connects the phone to pay terminals and future Internet of Things uses

Assembled in China

Foxconn and Pegatron in 50/50 split over 50M iPhone to be shipped by end of 2014

Brazil gets into the assembly action

Where iPhone 6 is assembled

Foxconn (Guangdong, China)
Foxconn (Henan, China)
Foxconn (Shanxi, China)
Pegatron (Shanghai, China)

Foxconn (Sao Paulo, Brazil)

US lacks labor capacity to ramp up production

Period to hire 8,700 engineers to manage 200,000 factory workers
US: 09 months
China: 15 days

Biscuit and Tea
In 2007 Steve Jobs decided that he wanted a glass screen for the iPhone a few weeks before launching.

American suppliers said the deadline was impossible. In China, a factory constructed a dormitory even before signing a contract so its employees could work 12-hour shifts.

When the deal was sealed, 8,000 workers were roused from sleep, given biscuit and tea, and they started fitting glass screens into the iPhone to product 10,000 iPhones a day.

130,000 Employees – additional workforce in Foxconn and Pegatron facilities to work on iPhone 6

10,000 “Foxbots” – robots deployed by Foxconn to assemble iPhone 6. Each robot can assemble 30,000 devices.

Is the iPhone Supply Chain Model Now the the Norm for American Manufacturers?

Stephen