A few years before Donald J. Trump entered politics, Apple and her partners built massive factories throughout China to put together iPhones. Mr. Trump was campaigning for President for the first time by promising his supporters that he would force Apple to make those products in America.
Almost ten years later little has changed. Instead of bringing the production house, Apple shifted some production from China to India, Vietnam and Thailand. Almost nothing is made in America and an estimated 80 percent of the iPhones is still made in China.
Despite years of pressure, Apple's company is still so dependent on China that the technology giant cannot work without it. Traveling by the Trump administration to change Apple's behavior, risks to damage the world's most valuable listed company. And all serious efforts to move Apple's production to the United States – if even possible – would take a titanic effort of both the company and the federal government.
In the four days after President Trump announced taxes on Chinese export of 145 percent last month, Apple lost $ 770 billion in market capitalization. It is up for some of those losses after Mr Trump gave consumer electronics manufacturers in China a temporary delay.
On Thursday, Apple reported $ 24.78 billion in quarterly profit, an increase of 4.8 percent compared to a year ago, a result of a strong turnover of apps and services and a new, cheaper iPhone, which the company introduced in February. China was the only region where it did not increase sales during the quarter.
An Apple spokesperson refused to make all managers available for this article. During a phone call with Wall Street -analysts on Thursday, Tim Cook, the chief executive of the company, said Apple that Apple had more than 9,000 suppliers in the United States and was planning to open a factory in Houston to make artificial intelligence servers.
David Yoffie, a professor at the Harvard Business School that has written case studies about Apple, said the investigation was justified because “they are at the most risk in a complete breakdown of the United States and China.”
Gene Munster, a managing partner at Deepwater Asset Management, who invests in emerging technology companies, estimates that a complete breakdown between the United States and China would reduce the value of Apple in two or more. It would fall to a company of $ 1.6 trillion from a $ 3.2 trillion company because about a third of sales are linked to products made in China, even if the only production shifts to other countries. And the value could fall to $ 1.2 trillion if it also lost its turnover to Chinese customers, as his rival Samsung did after a dispute between the governments of South Korea and China. Beijing has already discouraged iPhone purchases by government employees.
A major decrease in the value of Apple would rimify through the stock market. The company accounts for around 6 percent of the S&P 500 index. That means that for every dollar that has been invested in the fund, about 6 cents will go to Apple shares. Investors, and most 401 (K) owners, would see that stake in two.
Apple's carrots in China walk deep. Decades ago, the company worked with Beijing to set up production in China without creating a joint venture with a Chinese company, as necessary for many American companies. Subsequently, it perfected the art of putting together devices cheap in China and selling products to the growing middle class in the country. The combination has earned more than 80 percent of global fighting smartphone and generated $ 67 billion in annual Chinese turnover.
Over time, the tires of the company with China have been strengthened. Nowadays it not only makes most iPhones in China, but the Chinese suppliers also collect parts made in India and produce components and AirPods in Vietnam.
The dependence on Apple of China has made its supply chain something of a Rorschach test for the Trump administration, which wants to bring more electronics production to the United States. Apple has more power than any other electronics company to achieve the purpose of the administration. It makes more smartphones than anyone else and spends more money on components than rivals, giving it a huge influence on where his suppliers work.
The Trump administration wants Apple to start that process. In a television interview in April, trade secretary Howard Lutnick said that “the army of millions and millions of people screw small, small screws that screw iPhones in – things will come to America.”
But putting Apple under pressure to leave China can work counterproductively. The new rates could force Apple to increase iPhone prices or to accept smaller smartphone profit. Samsung phones, which are made in Vietnam and are not subject to Chinese rates, can be cheaper in comparison. Apple could become less competitive at home – a red line that Mr. Trump rarely wants to exceed.
Apple has opposed the making of iPhones and other devices in the United States because the company's operating team has established that it would be impossible, said two people who are familiar with the analysis that spoke of the state of anonymity. A decade ago it had a bad experience with purchasing screws and finding reliable employees to mount a Mac computer in Texas.
In China, the suppliers of Apple can bring 200,000 people together. They work in factories under the supervision of thousands of engineers with years of production experience. Most live in dormitories near the iPhone factory, where displays and other components are moving more assembly lines than a football field.
Finding many employees and experienced engineers would be impossible in most American cities, said Wayne Lam, an analyst at Techinsights, a market research agency. He said that Apple should develop more automated processes with robots to make up for the smaller population in the United States.
Mr Lam estimates that if Apple were to set up activities in the United States, it would have to charge $ 2,000 for an iPhone – now around $ 1,000 – to retain his current profit. The price can fall to $ 1500 in the coming years, because the company reduced the costs of training employees and making components.
“In the short term it is not economically feasible,” said Mr Lam. He added that it also made little sense to move the production of a device that was almost 20 years old and could be disturbed by a new gadget that was recorded by consumers.
Apple has shown the willingness to move its supply chain when there are stimuli. In 2017 it started a process to make iPhones in India, because the country had high taxes on the input, which would increase the prices to a point where Apple could not have claimed part of the fastest growing smartphone market in the world.
Nowadays Apple makes around 20 percent of its iPhones that are sold all over the world in India. It also makes some components there, including the metal frame. But it is based on Chinese companies to put together the displays and other complex parts.
Matthew Moore, who spent nine years as a production manager of Apple, said that India still had an advantage that America did not do that: “Engineers, everywhere.”
To lure Apple and electronic companies to the United States, Mr Moore, the Trump administration, believes in education for degrees in science, technology, engineering and mathematics. He also believes that the country should encourage loans for new production facilities, just like for housing with Fannie Mae and Freddie Mac.
Last month, Apple bought a temporary break. Mr Cook, who personally donated $ 1 million to Mr Trump's inauguration, lobbyed the Trump administration for the exemption it gave to iPhones and other electronics of the 145 percent tax on Chinese exports. However, it is temporary. The administration has said that it is planning to give more targeted rates for technical products.
Without investments in the government, Apple and smaller manufacturers will continue to make things in China because it has surplus equipment and engineers, Mr Moore, who started Cruz, said a company that makes hardware products like blenders.
“I don't think the ship has sailed, but it is absurd to think about four years that we are going to make iPhones here,” said Mr. Moore. “It would take 10 years.”
