In 2011, during a dinner in Silicon Valley, President Barack Obama questioned Apple’s founder and CEO, Steve Jobs, on why the company couldn’t manufacture its products on American soil. It’s reported that Jobs was dismissive, arguing that production and assembly jobs would never return to the United States.
At the time, offshoring was all but the default option for U.S. manufacturers, thanks to cheaper overseas labor and materials driving down overall production costs.
But in the years that followed, U.S. companies endured growing pressure to move their manufacturing operations back home, to the extent that the rate of reshoring reached an all-time high in 2018. Such efforts promise to boost the economy and create skilled jobs in the manufacturing industry but are also driven by political instability, trade wars, rising labor costs in developing countries, and disruptive global events — including COVID-19.
The movement continues to gain momentum. In the first half of 2023, the number of U.S. jobs created as a result of reshoring exceeded the previous year’s record rate of around 340,000 jobs. Research also shows that the geographic distribution of global suppliers will fundamentally shift by 2026 from being mostly global to mostly local. This is the result of economic and geopolitical instability.
A History of Apple Reshoring Efforts
Apple has long depended on offshoring to maintain its production schedule and manage costs.
In 2017, it was reported that China’s “iPhone City” in Zhengzhou could produce 500,000 iPhones a day. This was thanks in part to the Chinese government’s multi-billion-dollar investment in Apple’s manufacturing partner, Foxconn Technology Group.
In 2019, it was reported that five million Chinese jobs — including 10,000 direct employees — were dependent on Apple’s manufacturing.
As recently as 2022, Apple was manufacturing more than 90% of its products in China through outside contractors.
The cost and effort to reshore production at this scale would be astronomical. Indeed, it’s estimated that reshoring iPhone manufacturing alone would cost upwards of $4 billion, most likely to the detriment of the business and its end customers.
Nonetheless, Apple is conscious of maintaining its brand reputation, as well as the increased security and visibility that come with reshoring and nearshoring initiatives.
What changes has it made in the past 10 years?
December 2012 – Tim Cook Reveals Apple Reshoring Plans
Following Jobs’ death, Tim Cook took on the role of Apple’s CEO. During an interview with Brian Williams on NBC, he announced that the company would be investing $100 million to resume manufacturing in the U.S., starting with one of Apple’s existing Mac lines.
November 2013 – Apple Announces New Manufacturing Plant in Arizona
Apple announces plans to open a new manufacturing plant in Mesa, Arizona, that will run on 100% renewable energy. The plant will create 1,300 construction jobs and 700 positions at the plant itself, manufacturing sapphire materials for several Apple products.
March 2016 – Trump Urges Apple to Reshore Production
During his presidential campaign, Donald Trump called upon Apple to reshore its production and threatened to impose harsher tariffs on Chinese imports. “I’m going to get Apple to start making their computers and their iPhones on our land, not in China,” he said during a rally in March. “How does it help us when they make it in China?”
Since then, the Trump administration’s “America First” policies have led to speculation that Apple might be incentivized to reshore production with a lowered corporate tax rate and a one-time tax on its $200 billion in overseas accounts.
August 2017 – Foxconn Announces $10 Billion in Wisconsin Facilities
Apple uses Taiwan-based company Foxconn to assemble its products in China. Just as the trade tensions start to escalate rapidly between China and the U.S., Foxconn announces a $10 billion investment in production facilities in Wisconsin.
January 2018 – Apple to Invest $30 Billion in Capital Expenditures
Apple commits to investing more than $30 billion in capital expenditures in the U.S. over five years. This includes an increase in funding — from $1 billion to $5 billion — to its Advanced Manufacturing Fund, which serves to boost the domestic manufacturing sector. These investments are predicted to create an additional 20,000 Apple jobs.
Indeed, in September 2019, as an example, $250 million from the Advanced Manufacturing Fund was awarded to Kentucky-based Corning Incorporated, which supplies the company with precision glass for the iPhone, Apple Watch, and iPad.
July 2018 – Apple Ranked Company Most Committed to Reshoring Jobs
A new study ranks the manufacturing companies most committed to reshoring jobs, and Apple comes out on top. The study reported that Apple had reshored a total of 22,200 jobs.
September 2019 – Apple Announces Plans to Manufacture the Mac Pro in Texas
Apple confirms that it will manufacture its redesigned Mac Pro in Texas, from the same Austin facility where the Mac Pro has been made since 2013. The device will feature components manufactured by more than a dozen U.S. suppliers.
March 2020 (and beyond) – The Outbreak of COVID-19
Apple’s supply chain was not exempt from COVID-19-related disruption, with many of its suppliers in China being forced to shut down production for several weeks. Apple reported component shortages and shipping delays and even postponed the release of its iPhone 12.
At the time, many believed that the devastating events of 2020 and beyond would be enough to put an end to complex global supply chains.
The long-term impact of COVID-19 is still difficult to quantify, but at the very least, it motivated corporations to re-evaluate their supply chain strategies. A survey conducted at the beginning of 2022 revealed that more than 60% of European and U.S. manufacturing companies expected to reshore part of their Asia production in the next three years.
April 2021 – Apple Commits $430 Billion to the U.S. Economy
Apple announces its plans to invest $430 billion and create 20,000 new jobs across the U.S. over five years, supporting American innovation and driving economic benefits in every state.
May 2021 – Apple Invests $45 million to Corning Incorporated
Apple announces that it will invest $45 million from its Advanced Manufacturing Fund to Corning Incorporated, a supplier of precision glass for iPhone, Apple Watch, and iPad. The investment will be used to expand Corning’s U.S. manufacturing capacity and drive research and development into innovative new technologies.
September 2021 – U.S.-Based Apple Manufacturers On the Rise
It is reported that, as of September 2021, 48 of Apple’s 180+ suppliers have U.S. manufacturing sites, an increase of 25 from the previous year. Over 30 of these manufacturing sites are in California.
December 2022 – Apple Commits to U.S.-Made Microchips
In December 2022, Apple’s CEO, Tim Cook, announced that the company would be purchasing microchips made at an Arizona-based factory owned by Taiwan Semiconductor Manufacturing Company (TSMC) and partially subsidized by the U.S. government.
“Apple had to buy all the advanced chips from overseas; now they’re going to bring more of their supply chain home,” President Biden said at the time of the announcement. “It could be a game-changer.”
January 2023 – Apple Begins Expansion of Austin Campus
Apple is ready to start the second phase of development for its $1 billion Austin campus. The construction of two new buildings, Capstone Phase Two AC09 and Capstone Phase Two AC07, will begin in September 2023, and the estimated completion date is May 2025.
May 2023 – Apple Announces Multibillion-Dollar Broadcom Deal
Apple announced a multiyear, multibillion-dollar agreement with Broadcom to develop 5G radio frequency components — including FBAR filters — and cutting-edge wireless connectivity components, to be developed at several key U.S. manufacturing and technology hubs.
What Does the Future Hold for Apple’s Supply Chain, Manufacturing Jobs?
Apple’s efforts to establish home soil manufacturing have come at great expense. Since 2018, Apple suppliers have spent an estimated $16 billion on diversifying their production assets away from China to India, Mexico, the U.S., and Vietnam.
In addition, the reshoring process is long and labor-intensive. It’s not unusual for a company to spend 18 months or more establishing a new manufacturing plant, particularly if it is to cater to the large-scale manufacturing operations of a company like Apple.
Nonetheless, Apple is widely regarded as an innovative leader in supply chain management, unafraid to take risks and consistently setting high standards for its competitors. Its future decisions about reshoring will be highly strategic and with consideration of the business, its customer base, and the opportunities to create jobs for Americans.
