“We’re committed to supporting U.S. suppliers involved in every key stage of the chip-making process; from the earliest stages of research and development, to final fabrication and packaging.” – Sabih Khan, COO at Apple
I think there are two ways to look at the question of whether Apple can reshore production of the iPhone:
Can they do it today? No. The U.S. doesn’t currently have the necessary talent or production capabilities/capacity. (Also, the final product would cost about $3,500.)
But can they do it PERIOD? I think that’s a much trickier question.
Fortunately, Apple is approaching their reshoring effort in a multi-pronged way. They are investing in capacity, supply partnerships, talent, and rare earths. Only by combining these focus areas will Apple be able to mitigate the costs and risks associated with managing an extended global supply chain.
If anyone can do it, I think Apple can, and – if they succeed – it will likely kick off the same process in a lot of other companies and industries.
Another $100 Billion Investment
On August 6th, we learned that Apple plans to invest another $100 Billion in U.S. manufacturing across 10 states. That’s in addition to the $500 Billion they announced in February. The $600 Billion will be invested over 4 years.
The $600 Billion breaks down into the following (approximate) buckets of spending: $240 Billion for supply partner expansion and research and development hubs, $180 Billion for domestic fabs and tool installations, $120 Billion for Apple Manufacturing Academy training in Detroit, and $60 Billion for infrastructure like the Apple Intelligence factory they are building in Houston, Texas.
In addition to the fanfare associated with all those zeros, Apple announced their American Manufacturing Program (AMP). It will advance the company’s domestic manufacturing capabilities, with the ultimate goal of building an end-to-end silicon supply chain, allocating capital to build a comprehensive chain from raw materials to final packaging.
Leaning Into the Supply Chain
According to their own press release, Apple “currently partners with thousands of suppliers across all 50 states, supporting more than 450,000 supplier and partner jobs.” Roughly two-thirds of the Apple components made in the U.S. are exported to customers worldwide.
Apple’s $2.5 Billion investment will make it possible for Corning to run the world’s largest and most advanced smartphone glass production line and an Apple-Corning Innovation Center.
But none of this will help if Apple doesn’t also have access to rare earth minerals, and they are investing in those domestically as well.
MP Materials, another Apple partner, is the only fully integrated rare earth producer in the United States. The companies plan to open a rare earth recycling line in Mountain Pass, California, which will “close the loop on materials, potentially reducing raw import needs by 20-30% based on similar closed-loop models in electronics.”
Last but not Least: Talent
Materials and components are critical if there is any hope of reshoring iPhone production, but so is talent. Having the necessary workforce with the right skills (or not) will make or break the whole effort. Apple has a plan to address domestic talent shortages through partnerships, very similar to how they are forming supply relationships to meet their material needs.
Apple founded the Apple Manufacturing Academy in partnership with Michigan State. This is the second time Apple has collaborated with the university; they also did so back in 2021 to found the Apple Developer Academy. The Academy will offer “consultations and courses to small and medium-sized businesses on how they can implement advanced manufacturing and AI into their manufacturing programs.”
It won’t be easy for Apple to reshore production of the iPhone, but we should all be cheering for them. After all, not only will it insulate a critical product category from global trade risk and create thousands of good jobs, but it may also create a model and a path for other companies and industries to follow.
