Does anyone know the real reason why Apple is moving some of its production back to the U.S.? Better QA? A deal with Foxcon?
The below is copied from a piece of research I wrote in 2012. Bottom line is Apple is probably making this move to boost corporate image, at a negligable negative impacto to margin / profitability.
"The Chinese labor-cost component of an entry-level iPad retailing for $500 is estimated at $10, or 2% of revenue, while the profit margin is estimated at $150, or 30% of revenue. If Apple were to move production to the USA, and if one assumes that assembly costs would triple (to $30), it is conceivable that Apple could convince customers to pay for a large portion of the price increase based on the appeal of a “made in the USA” product. The impact on margins of any cost that could not be passed on would be modest. Furthermore, in light of recent negative publicity about Chinese labor conditions, and considering the high unemployment rate in the U.S., such a move could substantially boost Apple’s corporate image. However, the U.S. lacks the sheer labor capacity that would be required in order to ramp up production of iPads at the speed needed to maintain the company’s edge in the hyper-competitive tablet and mobile device market. Also, U.S. regulations on working conditions, as well as cultural factors, would make it impossible for domestic manufacturing facilities to achieve the productivity levels of Chinese facilities. Thus one may assume that Apple’s manufacturing sourcing strategy is primarily motivated by scalability and supply chain risk, and only secondarily by total landed cost."