How is the iphone made

Where Is the iPhone Made?

It takes a village to build an iPhone

Anyone who has bought an iPhone or another Apple product has seen the note on the company’s packaging that its products are designed in California, but that doesn’t mean they’re manufactured there. Answering the question of where the iPhone is made isn’t simple.

Assembled vs. Manufactured

When trying to understand where Apple manufactures its devices, there are two key concepts that sound similar but are different: assembling and manufacturing.

Manufacturing is the process of making the components that go into the iPhone. While Apple designs and sells the iPhone, it doesn’t manufacture its components. Instead, Apple uses manufacturers from around the world to deliver individual parts. The manufacturers specialize in particular items—camera specialists manufacture the lens and camera assembly, screen specialists build the display, and so on.

Assembling, on the other hand, is the process of taking all the individual components built by specialist manufacturers and combining them into a finished, working iPhone.

The iPhone’s Component Manufacturers

Because there are hundreds of individual components in every iPhone, it’s not possible to list every manufacturer whose products are found on the phone. It’s also difficult to discern exactly where those components are made because sometimes one company builds the same component at multiple factories.

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Maritsa Patrinos / Lifewire

Some of the suppliers of key or interesting parts for the iPhone 5S, 6, and 6S and where they operate, included:

• Accelerometer: Bosch Sensortech, based in Germany with locations in the U.S., China, South Korea, Japan, and Taiwan
• Audio chips: Cirrus Logic, based in the U.S. with locations in the U.K., China, South Korea, Taiwan, Japan, and Singapore
• Battery: Samsung, based in South Korea with locations in 80 countries
• Battery: Sunwoda Electronic, based in China
• Camera: Qualcomm, based in the U.S. with locations in Australia, Brazil, China, India, Indonesia, Japan, South Korea, and more than a dozen locations through Europe and Latin America
• Camera: Sony, based in Japan with locations in dozens of countries
• Chips for 3G/4G/LTE networking: Qualcomm
• Compass: AKM Semiconductor, based in Japan with locations in the U.S., France, England, China, South Korea, and Taiwan
• Glass screen: Corning, based in the U.S., with locations in Australia, Belgium, Brazil, China, Denmark, France, Germany, Hong Kong, India, Israel, Italy, Japan, South Korea, Malaysia, Mexico, Philippines, Poland, Russia, Singapore, South Africa, Spain, Taiwan, The Netherlands, Turkey, the U.K., and the United Arab Emirates
• Gyroscope: STMicroelectronics. Based in Switzerland, with locations in 35 countries
• Flash memory: Toshiba, based in Japan with locations in over 50 countries
• Flash memory: Samsung
• LCD screen: Sharp, based in Japan with locations in 13 countries
• LCD screen: LG, based in South Korea with locations in Poland and China
• A-series processor: Samsung
• A-series processor: TSMC, based in Taiwan with locations in China, Singapore, and the U.S.
• Touch ID: TSMC
• Touch ID: Xintec. Based in Taiwan.
• Touch-screen controller: Broadcom, based in the U.S. with locations in Israel, Greece, the U.K., the Netherlands, Belgium, France, India, China, Taiwan, Singapore, and South Korea
• Wi-Fi chip: Murata, based in the U.S. with locations in Japan, Mexico, Brazil, Canada, China, Taiwan, South Korea, Thailand, Malaysia, Philippines, India, Vietnam, The Netherlands, Spain, the U.K., Germany, Hungary, France, Italy, and Finland

The iPhone’s Assemblers

The components manufactured by those companies all around the world are ultimately sent to just two companies to assemble into iPods, iPhones, and iPads. Those companies are Foxconn and Pegatron, both of which are based in Taiwan.

Technically, Foxconn is the company’s trade name; the firm’s official name is Hon Hai Precision Industry Co. Ltd. Foxconn is Apple’s longest-running partner in building these devices. It currently assembles the majority of Apple’s iPhones in its Shenzen, China, location, although Foxconn maintains factories in countries across the world, including Thailand, Malaysia, the Czech Republic, South Korea, Singapore, and the Philippines.

Pegatron is a relatively recent addition to the iPhone assembly process. It is estimated that Pegatron built about 30 percent of the iPhone 6 orders in its Chinese plants.

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An iPhone’s Journey, From the Factory Floor to the Retail Store

(And Why the Product Costs More in China)

The iPhone is Apple’s most profitable and best-selling product. More than a billion have been sold since the first one was released.

About half of all iPhones now are made in a huge manufacturing facility in the central Chinese city of Zhengzhou. This is the story of how an iPhone made there can end up in your hands.

Getting the Parts

Components from more than 200 suppliers go into each iPhone.

Apple buys many of the components for iPhones — like the memory chip, the modem, the camera module, the microphone and the touch-screen controller — from more than 200 suppliers around the world. Foxconn, the Taiwanese company that runs the Zhengzhou facility, even produces some smaller parts, such as metal casings.

Apple orders many of the components from global suppliers, and then sells them, en masse, to one of its contract manufacturers based in China. In Zhengzhou, that means Foxconn.

Building the Phones

Roughly 350 iPhones can be produced each minute in the factory.

Foxconn’s facilities in Zhengzhou cover 2.2 square miles and can employ up to 350,000 workers, many of whom earn about $1.90 an hour. The operation does what is called F.A.T.P., or final assembly, testing and packaging.

There are 94 production lines at the Zhengzhou manufacturing site, and it takes about 400 steps to assemble the iPhone, including polishing, soldering, drilling and fitting screws. The facility can produce 500,000 iPhones a day, or roughly 350 a minute.

After the iPhone rolls off the assembly line, it is placed in a sleek white fiberboard box, wrapped and put on a wooden pallet, and then wheeled out to waiting trucks.

Passing Through Customs

A government customs facility sits just outside the Foxconn factory.

The newly assembled iPhone is transported a few hundred yards beyond the factory gate, where China built a large customs facility. The customs operation sits in a so-called bonded zone, which allows Apple to sell the iPhones more easily to Chinese consumers.

As the final point of assembly for the iPhone, China also serves as a starting point for Apple’s global tax strategy. In Zhengzhou, often in the customs facility, Foxconn sells the completed iPhones to Apple, which in turn resells them to Apple affiliates around the world.

The process, most of which takes place electronically, allows Apple to assign a portion of its profits to an affiliate in Ireland, a tax-advantageous locale. The system is not unique to China.

Shipping Abroad

Smartphones travel in Boeing 747s.

IPhones bound for the United States and other parts of the world leave customs by truck and are transported three miles to the Zhengzhou airport. The airport has been significantly expanded in recent years, as production of the iPhone has increased.

Some years ago, personal computers that were made in China were transported to the United States by container ship, with a trip lasting about a month. Smartphones are small enough to be shipped by plane in huge quantities — and cost effectively. A single wide-body Boeing 747 can easily carry 150,000 iPhones tucked into its aluminum canisters.

From Zhengzhou, UPS, FedEx and other freight carriers typically fly United States-bound iPhones to Anchorage. There, they refuel, before going on to Louisville, Ky., a major logistics hub, or other points in the country.

Staying in China

It takes almost as long to get a phone to Shanghai as it does to San Francisco.

For an iPhone headed for the China market, customs officials use an electronic system to virtually stamp the goods as “exports” and then restamp them as “imports.” In Zhengzhou, the process happens in the same customs facility just outside the factory.

Once the products are declared an import, customs can collect a 17 percent value-added tax, a kind of national tax, based on the import price. Afterward, the goods are approved for transport around China.

Domestic-bound iPhones are typically loaded onto a large truck and taken on an 18-hour drive from Zhengzhou to Shanghai, in eastern China, where Apple has set up its national distribution center. A single tractor-trailer holds up to 36,000 iPhones. Because the vehicles have about $27 million worth of freight on board, they are equipped with cameras and sometimes accompanied by armed security guards.

After the iPhone leaves the Foxconn factory in Zhengzhou, it takes two days, on average, to get to a store in Shanghai, a 590-mile trip. It takes three days, on average, to get a store in San Francisco, some 6,300 miles away.

Differing Prices

IPhones can sell for nearly 20 percent more in China than in the United States.

Chinese customers can pay much higher prices, because of currency fluctuations and the country’s hefty value-added tax.

A 32-gigabyte iPhone 7 sells for about $776 at the Apple Store in Shanghai. In New York, it goes for $649.

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How & Where iPhone Is Made: Comparison Of Apple’s Manufacturing Process

We call it the iPhone Saga, how Apple has perfected the art of juggling the global supply chain, its nose locked on where on earth to get suppliers that can offer the most efficient and best value parts under Apple’s strict quality benchmark. This infographic comes on the heels of our editorial team’s past effort to follow the iPhone supply chain and what it means to American manufacturing.

The latest story is about the iPhone 6 using glass and not the rumored sapphire crystal. But the story is more than just the material; it’s whether the cover would be made in America or elsewhere.

When GT Advanced, the supplier of TouchID’s sapphire crystal, bumped up its facilities in Mesa, AZ, rumor had it that the iPhone 6 would feature a Made-in-the-USA sapphire crystal cover. It turned out iPhone 6 is still in glass, and it’s likely by Corning, which outsources its fabrication to Asia and France.

It appears that Apple is giving out top secrets and arming our biggest enemies with state-of-the-art technologies that can diminish our competitiveness. Foxconn, Apple’s biggest supplier, which assembles the iPhones mostly in its facilities in China, has installed robots (nicknamed Foxbots) for the first time to meet its iPhone production quotas. How ever can this company invest in advanced robotics if not for the humongous Apple orders?

But, there’s the rub. It’s rumored Apple is exploring ways to scale down costs by trying robots over Chinese workers. If that sounds familiar, it’s because we’ve seen that before. Our fathers still remember how Japanese robotics booted out many jobs in the American automotive industry. Yes, the China factory is maturing (higher wages and increasing competition from other Asian countries) and it’s inching closer to an American model. I don’t know how things will turn out in the next five years, but that it won’t stay long as it is — America outsources, China receiveth. Who knows, China might one day, under pressure to cut costs, outsource jobs to, well, us?

WHERE ON EARTH IS IPHONE MADE, FOLLOW ITS GLOBAL SUPPLY CHAIN IN THIS INFOGRAPHIC:

Author: Alex Hillsberg financesonline, an independent journalist specializing in topics about technology, B2B & SaaS solutions and finance in general.

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The Economics of the iPhone

What Are the Economics of the iPhone?

It’s estimated that more than 900 million people in the world own an iPhone.   From our culture to the economy, the small, handheld device has made a splash, changing the way we live, and that influence is likely to continue.

Apple Inc. (AAPL) unveiled the XR and XS in 2018, which was the company’s cheapest phones in recent years.     Meanwhile, the iPhone X saw its international launch with a $999 price tag.   In 2019, Apple unveiled its latest iPhone with the iPhone 11, which has a dual-camera lens and the iPhone 11 Pro along with its three camera lenses. 

However, Apple’s greatest product has also been its greatest curse. The iPhone makes up approximately 50% of the company’s total revenue, meaning the company is at the whim of the mobile smartphone market. As a result, Apple has been busy creating ancillary services and products that complement the iPhone. 

With all of the products and services intertwined, it’s made it challenging for investors to determine, just how much money Apple earns from iPhone sales.

Key Takeaways

• Sales from the iPhone make up more than 50% of Apple’s total revenue. 
• Although it’s estimated that 900 million people own an iPhone worldwide,   sales were down in 2019 versus 2018. 
• Apple’s services and wearables businesses grew by 16% and 41% respectively, which indirectly adds new revenue streams for the iPhone. 

Understanding How the iPhone Makes Money

Investors and analysts can not easily calculate how much profit Apple earns on each product. Apple, in the past, had reported unit sales for each product. However, the company has stopped that practice and instead, reports revenue by product. The table below contains the products and services revenues for the past three years. The data was pulled from the company’s 10K report on September 28, 2019. 

• Apple reported $260 billion in revenue for the end of the company’s 2019 fiscal year–highlighted in green in the table below.
• The iPhone generated $142.3 billion in revenue in 2019, meaning the iPhone represented approximately 55% of the total revenue for the year.
• The iPhone revenue declined in 2019 by 14% versus 2018. However, revenue for 2017 was an 18% increase from the year prior. 

Apple is one of the most valuable companies to date, yet more than 50% of its revenue depends on one product line.

Services and Wearables

Apple has been actively expanding its services business in recent years, which includes iTunes and Apple T.V. The company has also grown its wearables business such as the AirPods.

It’s important to consider that the company’s services and wearables business is an extension of the iPhone and other hardware products. To conclude that Apple had a poor year by only looking at the 14% decline (-$22 billion) in iPhone revenue for 2019 versus 2018 would not be a fair analysis. 

The company also grew its services business by approximately $6.5 billion and wearables by $7.1 in the same period for a total of $13.6 billion. The $13.6 billion only partially offsets the $22 billion decline in iPhone revenue from 2018. However, the services and wearables businesses are growing at faster rates–16% and 41% respectively–versus the decline in iPhone sales of 14% from 2018. In other words, Apple is using the services and wearables business to fill the gap left from iPhone revenue declines. 

The ancillary businesses would not be possible without the hardware products such as the iPhone, which makes determining the overall profitability for the iPhone that much more complex.

What Does it Cost to Build an iPhone?

Apple’s sourcing model is one of the reasons it generates attractive profit margins. The company makes very little of its own products. Instead, components and materials are gathered from around the globe and sometimes even from direct competitors, such as Samsung. This process significantly lowers capital expenses for Apple, saves the consumer a bit of money, and lets shareholders benefit from the difference.

The iPhone 11 Pro Max has a retail price of $1,099 per unit.   It’s estimated that all of the components that make up the iPhone cost approximately $490.50 per phone, according to a report by NBC News. Some of the components include the Samsung battery unit, which costs $10.50, the triple camera costs $73.50, and while other equipment such as the processor, modem, and circuit boards cost approximately $159 per phone. 

A $490 cost and a retail price of $1,099, Apple appears to be earning a $609 profit per phone. However, it’s difficult to determine the actual profit per unit since there are other cost factors that go into making the iPhone. The manufacturing, assembly, software, research, and development costs all must be paid for with the $609 profit per unit. There are also marketing and advertising costs as well as the cost of sales, general, and administrative costs such as the corporate office.

How the iPhone Helps the Economy

Apple took it upon itself to illustrate its effect on the economy and the job market. Apple reports that the company has created a «job footprint» of nearly 2.4 million jobs across the U.S. 

According to Apple, most of the jobs created are in the app economy, which is:

«Currently responsible for 1.9 million American jobs—an increase of 325,000 in the last two and a half years.» 

Apple also employs 90,000 workers in all 50 states and is planning to add 20,000 more jobs by 2023. 

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