Apple at 100% capacity to make iPhones outside China

Bloomberg reports that Apple’s primary business partner has capacity to produce 100 percent of iPhones outside China demonstrates America’s strength in US Trade War.

Just hours after Simon Rabinovitch, Asia editor for the Economist, claimed damage to global supply chains from the Sino-U.S. Trade War may be "irreversible" and push the world into recession, Bloomberg reported that an executive of Foxconn, Apple's Taiwan-based primary assembly partner, has enough non-China capacity for all iPhone production.

Worldwide stock prices rallied overnight on belief that the supply chain risks to U.S. multinational corporations that supposedly forced a quick settlement of President Trump’s tariff threats against Mexico would force a China settlement at the June 28 G-20 Meeting in Japan. But the early morning news of Apple iPhone contingent supply chain erased the stock gains.

According to Thompson Reuters, components breakdown for the $999 list price iPhone X with 64GB of storage is $378.25. Reuters found that only a $6 commoditized battery pack and $8 in basic assembly cost is attributable to China inputs.

The biggest international vendor for the Phone X is South Korea that makes $110 touch screen displays, followed by $33.45 for memory from Japan or South Korea. For the hundreds of different iPhone components, the supply chain includes about 40 nations.    

Foxconn’s parent Hon Hai Precision Industry Co. Ltd., as Apple's premier partner in building mobility devices, has assembled a majority of Apple smartphones since 2010 at its ‘iPhone City’ plant that covers 2.2 square miles and dozens of buildings in Zhengzhou, China.

With over 350,000 staff working an average of six days a week for 10-hour shifts, the plant produces about 500,000 iPhones a day, or up to 350 a minute. But Foxconn also has a network of worldwide assembly plants that include Malaysia, Thailand, the Czech Republic, South Korea, the Philippines, and Singapore.

The other major iPhone assembler in China was Taiwan-based Pegatron that was estimated to have assembled about 30 percent of the production of iPhone 6s. But the company was the subject of a series of BBC investigative journalism stories beginning in 2014 that highlighted dismal working conditions and employee mistreatment in its Shanghai assembly plant. The BBC claimed that Pegatron workers labored seven-day a week schedules with twelve to sixteen-hour shifts. Workers were filmed falling asleep on the production line and slept at night in cramped 12-worker dormitory rooms. 

President Trump seems willing to continue ratcheting up the Trade War with China as he flew to Nebraska and Iowa on June 11 to offer solidarity to his rural farmer voting-base suffering from what he calls “unjustified retaliation and trade disruption” by China.

Enodo Economics commented that China's Commerce Ministry is threatening countermeasures to “resolutely safeguard the interests of China and its people.” Beijing threats include issuing a blacklist of “unreliable” foreign companies and warning students and tourists about travelling to the USA. 

Due to its complicated international supply chain, Wall Street analysts had expected Apple to lose profit by maintain sales with iPhone subsidized prices that absorb both U.S. and China tariffs. But Apple’s stock is up +11 percent since June third as the tech world’s biggest player is demonstrating that its complicated supply chains may be much more flexible and self-healing than originally assumed.