Why 'Made in America' iPhones Are Still a Distant Dream for Apple in US

In February 2011, during a dinner with Silicon Valley executives, then US President Barack Obama asked Apple co-founder and CEO Steve Jobs, "What would it take to make iPhones in the United States?" Jobs responded candidly, "Those jobs aren't coming back." An exchange widely reported at the time and even found mention in Jobs' official biography by Walter Isaacson.

Today, once again a US President is pushing to bring iPhone production back to the United States. The difference is, Donald Trump is not using dinner conversation but rather high tariff threats and a social media campaign.

Days after announcing his triple-digit tariffs against Apple’s largest sourcing country, China, on April 9, Trump posted on Truth Social, “This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing.”

He was referring to Apple’s $500 billion investment announcement to expand its production footprint across the US. What he missed was the iPhone maker’s supplier list that it releases every year. The 2024 list, as per Nikkei Asia, included 187 companies from around the globe that together account for 98% of Apple’s procurement spending. About 84% of them have facilities in China—and their presence has even grown compared to 2023.

Notably, the Japanese publication's analysis showed that since 2020, Chinese factories have remained Apple’s largest suppliers, even as the list also included nations like Taiwan, Vietnam, Thailand, South Korea, new entrants like India, and even the US.

Apple’s Efforts to ‘Make in America’

While reports say that the company has been trying to diversify its supply chain out of Xi Jinping-led China since Donald Trump’s first term—when his slew of tariffs kicked off a “trade war”—it hasn’t really paid off.

Reasons could be found in CEO Tim Cook’s 2017 remarks at the Fortune Global Forum, when he said the common perception that China has cheap labor costs is a misconception.

“China stopped being the low labor cost country many years ago. The reason is because of the skill, the quantity of skill in one location, and the type of skill it is. The tooling skill is very deep here. In the US, you could have a meeting of tooling engineers, and I'm not sure we could fill the room. In China, you could fill multiple football fields," he said in a now-viral interview.

His remarks, as per experts and the American electronics industry’s existence, still hold.

“They (China) didn’t just win this by chance. They earned it by thinking long-term. They built roads, ports, power grids, and factories—all connected, all ready to go. They trained millions to work the line, fix the machines, and build things fast,” Pankaj Prasad, founder and CEO of US-based AI communication platform Airwave, told Outlook Business.

He added, when a place can give you land, labor, logistics, and a hundred local suppliers within arm’s reach—that’s hard to walk away from, explaining Apple’s dilemma.

That doesn’t mean Apple didn’t try. Apple has been assembling the Mac Pro in Austin since 2013. The facility was upgraded in 2019 to accommodate the latest Mac Pro models.

Cornered by President Trump in 2017, Apple launched a $5 billion Advanced Manufacturing Fund to support innovation and job creation in the US manufacturing sector. This was used to invest in companies like Corning Incorporated to make durable glass components for devices like the iPhone and iPad, and Finisar for vertical-cavity surface-emitting lasers (VCSELs) used in Apple devices for Face ID, Animoji, and Portrait mode selfies.

The company says this fund has since grown to $10 billion and its manufacturing footprint has expanded to 20 states—backing thousands of suppliers, Apple Intelligence infrastructure and data centers, corporate facilities, and Apple TV+ productions. Further, Apple also touts being the largest customer of TSMC's Fab 21 facility in Arizona.

The iPhone maker is also constructing a 250,000-square-foot facility in Houston dedicated to manufacturing AI servers for its data centers. It is also setting up the Apple Manufacturing Academy in Detroit, Michigan to train workers and assist small and medium-sized businesses in adopting AI and smart manufacturing techniques.

Though analysts still remain skeptical of how these efforts would lead to US factories replacing Foxconn, Apple’s biggest supplier from Taiwan, which operates the world's largest iPhone factory in Zhengzhou, China, with a reported workforce of 200,000 that makes iPhones, iPods, iMacs, among other devices.

China’s Low-Cost Labour

While in 2017, Cook denied being in China for low cost, statistics show a different picture. For a broader comparison, the Reshoring Institute, a nonpartisan organization, reported that the average annual salary for a US production worker in 2022 was roughly $32,000. In contrast, a production worker in China earned about $13,000 per year—less than half. Labor costs are even lower in other emerging manufacturing hubs: factory workers in Vietnam earn around $7,000 annually, while their counterparts in India make just $2,000.

An analyst quoted by The Wall Street Journal estimated that assembling a single iPhone in China costs around $30 in labor, while doing the same in the United States would cost closer to $300—a tenfold increase.

“In the United States, I must pay my employees a livable wage, offer paid time off, holidays, and healthcare benefits. Most skilled engineers and technical employees also want retirement benefits and other incentives to stay long-term on your staff,” says Cassandra Cummings (Gluyas), CEO of Thomas Instrumentation Inc., a New Jersey company specialising in custom electronics manufacturing.

She adds that in China, “they don't appear to have to pay livable wages or offer any benefits, so the costs per each employee are minimal.”

It created a huge imbalance in the pricing structure between the US and China, which, as per Cummings (Gluyas), led to consumer-based electronics-focused companies following the likes of Apple to find suppliers in China and elsewhere over the years.

“They were ok with the quality trade-off for the cost savings,” she said.

Apple’s Shift to China

A 2012 New York Times article elaborates Apple’s shift to China in early 2000s. “In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions,” it said, referring to the firm’s plant in Fremont, which was used to produce Macintosh computers in 1983. Jobs used to brag Macintosh was “a machine that is made in America.” They later also started making iMacs in a plant in Elk Grove, California in 2002.

But by 2004, amid financial struggles and in search of better raw material Apple had largely turned to foreign manufacturing, as per the NYT report. Its guiding force was current CEO and then-operations expert, Tim Cook. They followed the same path as most other American electronics companies.

The CEO of Thomas Instrumentation, which customises and manufactures electronics designs for industrial automation, military, automotive, and healthcare use, says environmental and safety regulations, on top of pricing, contributed to this exodus.

“Most businesses require special certifications like ISO 9001:2015, IPC-A-610, and there's a myriad of ISO certs for each industry like automotive, military, medical, etc. Each one requiring $10,000s to maintain annually,” said Cummings (Gluyas). On top of this, she says, a sizeable investment is also required to have waste products properly stored, picked up, and recycled per regulations.

Can Tariffs Help the US in the Electronics Race?

Data from the joint UN–WTO agency International Trade Centre show how the US has lost its edge over the years in electronics exports. Between 2015 and 2024, US exports of goods which include smartphones, electronic circuits, and other devices, rose from roughly $170.0 billion to $213.9 billion—a 25.8% increase—while China’s exports jumped from about $60.0 billion to $928.0 billion, an astonishing 1,446% surge. Despite the steady gains, China’s export growth has far outpaced America’s.

As per their most recently available dataset, China exports 25% of the world’s electronic goods, while the US accounts for 5.9% of world electronics exports—fourth in the world ranking after Hong Kong and Taiwan.

In a move aimed at bridging this gap, and other deficits the US has with manufacturing giant China, Trump had proposed to raise tariffs on all Chinese imports to as high as 245%. But on April 11, semiconductors, phones, and computers were granted exemptions from these tariffs.

Later, in an Oval Office briefing with reporters on April 14, Trump said, “I speak to Tim Cook. I helped Tim Cook recently, and that whole business. I don’t want to hurt anybody, but the end result is we’re going to get to the position of greatness for our country.”

He had granted a similar exemption to the company back in 2020, after a meeting with the Apple CEO.

Experts, however, don’t agree that these tariffs would have made a “Made in America” iPhone possible anytime soon.

“Tariffs just make things more expensive. They don’t solve the problem, they just shift the pain. Incentives—that’s how you bring people back to the table. You want companies to build here? Make it worth their while,” says Airwave CEO Prasad.

He is referring to the approach of Trump’s predecessor, Joe Biden, who launched the CHIPS and Science Act with a package of $52.7 billion in subsidies and tax incentives in August 2022. One of the beneficiaries of this incentive scheme is TSMC and its Arizona plant, which received $6.6 billion in direct funding and up to $5 billion in loans from the U.S. Department of Commerce.

Alongside TSMC, the Act has extended significant funding to a range of other semiconductor companies. Intel leads with up to $7.865 billion, followed by Micron ($6.165 billion), Samsung ($4.745 billion), and GlobalFoundries ($1.45 billion) all to set up or upgrade facilities across the US. Texas Instruments secured $1.61 billion, while Amkor Technology was awarded $407 million for packaging and testing. Smaller yet strategic grants went to Hemlock Semiconductor ($325 million), Corning ($32 million), Edwards Vacuum ($18 million), and Infinera Corporation—all aimed at reinforcing the U.S. chip supply chain across fabrication, materials, and equipment.

But, President Trump has threatened to pull the plug on the scheme, calling it “horrible” during his first State of the Union address in Congress in March this year.

"If that ends up happening, experts say it would be a big blow to the US’s plan to revive its manufacturing sector — including the prospect of a ‘Made in America’ iPhone, if that ever comes to pass."