Tariffs Are Proving 'Big Headache' For Tech Giants, Says Foxconn (ft.com) 153
The US government's tariff announcements have become a "big headache" for technology companies such as iPhone maker Apple and cloud service provider Amazon, their manufacturing partner Foxconn said on Friday, in a rare public admission of the disruption caused by President Donald Trump's erratic trade policy. Financial Times: "The issue of tariffs is something that is giving the CEOs of our customers a big headache now," chief executive Young Liu told investors on an earnings call. "Judging by the attitude and the approach we see the US government taking towards tariffs, it is very, very hard to predict how things will develop over the next year. So we can only concentrate on doing well what we can control."
Liu said the company's customers were "one after another" hatching plans for co-operating with Foxconn on manufacturing in the US. He declined to give details as those plans were not yet finalised, but said there should be "more and more" manufacturing in the US.
Liu said the company's customers were "one after another" hatching plans for co-operating with Foxconn on manufacturing in the US. He declined to give details as those plans were not yet finalised, but said there should be "more and more" manufacturing in the US.
Why are iPhones made in China? (Score:3)
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You mean "solely".
Now give me my Funny mod.
On the story, the real problem is that pure profit maximization creates insane and perverse motivations. Covering costs is not sufficient. Doing honest work to make an honest living has become something of a sad joke. (But not worth a Funny mod point.) If the only objective is to squeeze out the biggest possible number for the profit, then anything that confuses the calculations becomes the enemy of profit maximization--and diddling around with random taxes and ta
Re: Why are iPhones made in China? (Score:2)
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I don't know what you mean designed the US, if the company can make a buck then it will offshore that as well just like they do in my company, a US company that has no development in the US. What you mean is owned in the US. And even then if they if they find a tax haven they the company will set up a shell company their too. The thing that is currently being produced in the US is the people that own it make money.
Apart from that offshoring everything is a security risk, if all/most the manufacturing is don
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Low friction international trade means supply chains reach into any place where some widget can be produced cheaper. If Apple saved thirty cents on every iPhone sold by doing this, that pays Tim Cook's salary. Except it doesn't save thirty cents per unit, it saves hundreds of dollars. These kind of spiderweb supply chains that reach across international boundaries are fantastically economically efficient.
But efficiency isn't everything, as we found out in the COVID-19 pandemic these kinds of supply chai
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Comparative advantage was what we taught 40 years ago. I don't think Donny understands gains from trades or opportunity costs.
Re:Why are iPhones made in China? (Score:5, Informative)
Re: Why are iPhones made in China? (Score:3)
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I am curious how much the US would have to jack up the tariffs before manufacturing electronics in the US would actually make financial sense again. I don't think that a 25% increase is going to even come close to covering the wage gap between US and Chinese workers, let alone the more lax environmental laws in China.
Would 40% be enough, once you factor in the decreased shipping costs of finished goods from the US vs China? Shipping by ocean is still pretty cheap, so maybe it would take more like a 50% tari
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Re: Why are iPhones made in China? (Score:3)
Re:Why are iPhones made in China? (Score:5, Informative)
Carefully crafted tariffs can encourage production to move to the US, but these are not those. Say you want to assemble an iPhone in the US. You need all the component parts - SoC and modem from Taiwan, flash memory from Korea, screen, case, and most of the rest of it from China.
You could set up a factory in the US to make say the cases, as they are machined parts. But the screen? Proprietary Chinese technology, and the only other people with that cutting edge tech are the Koreans and Japanese. The SoC? Only TSMC can fabricate them, and setting up your own foundry is not as simple as buying a 4nm chip machine from ASML. It's not just the high end stuff either, you need huge quantities of connectors and passive parts that aren't made in the US either. Even if you build a factory, the cost is going to be a lot higher due to lower volume, before you even get to wages and all the rest of it.
It's a long term project, a couple of decades.
You are dreaming if you think that these companies will just absorb the price increases. You are going to pay them.
Re: Why are iPhones made in China? (Score:3)
You're in Europe -- only a handful of foundries can be found there. The US isn't Europe. TSMC alone has several in my home state of Arizona, as does Intel. And both are currently building more there.
Mind you I'm not at all in favor of these tariffs, in fact I believe they're a terrible idea. Nevertheless, you're so incredibly narrow minded.
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Europe has 50+ fabs, and the US has about 80. TSMC has only one in Arizona, and it just opened. No other is planned in that state.
The difference is nowhere near as vast as you try to paint it.
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And none of that is relevant in the slightest to discussions about "comparative advantage" and why trade can and should (in an ideal world) be beneficial to both parties, including consumers as a well as corporations. Nor why phones are made in China.
Note that Ford rapidly built factories around the world shortly after getting the assembly line concept working for him.
Re: Why are iPhones made in China? (Score:2)
What Ford understood was 1) making cars on an assembly line was the key to making them salable at a profitable price and 2) paying a competitive wage retained talent. All this other crap people think he was trying to accomplish is in their minds alone.
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More likely its after the fact propaganda by the Ford company because they needed the public to associate their namesake with something other than very public nazi sympathies.
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Thank you for the laugh!
He's dead. And so are the values of the early 20th century in which he lived. People from that time would probably be horrified by the proliferation of greed and the lack of shame that runs rampant today. That's not to say that greed didn't exist back then, but the extent to which companies are abusing their customers toda
National sales tax (Score:2)
He doesn't quite have the votes to push those tax cuts through the house without offsetting them so he's trying to do massive spending cuts but he can't touch the big stuff like Medicare or Medicaid. So he's trying to create a national sales tax using tariffs. Basically shifting the tax burden of himself and his ultra rich buddies onto you and me
Re: National sales tax (Score:3)
The problem with your theory is that it assumes Trump actually has a plan. There is only one sufficient explanation for anything Trump does: he is very stupid. Stupid people double down on stupid ideas because their ego cannot allow them to admit fault.
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There is only one sufficient explanation for anything Trump does: he is very stupid.
And ignorant. One can be very stupid but not particularly ignorant: I have come across a few in my time. Trump is both.
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Thing is a lot of countries already have a consumption tax as their policy, it's called VAT
Take this time to plug what I think is the "actually conservative" tax policy, Land Value Tax [wikipedia.org]
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Posting ac doesn't work when you leave in that sig. Unless you're actually the rslivergrunt troll poster but this time it wasn't an obvious parody...
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Comparative advantage was a massive oversimplification then too. Mercantilism is the economic choice of champions when geopolitics are relevant ... and they are always relevant.
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I think from how economists would think about it comparative advantage as just a real thing that exists and to be evaluated more than a mode like mercantilism, if that makes sense.
Like there is math for measuring comparative advantage and it would still exist under mercantilism. It can be overly simplified for sure but we know it's a real thing in the world.
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Yeah I learnt that in economics, what I don't think economists don't understand that everything is not about money. Their whole field basically devoted to optimizing the amount of money.
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You want the jobs that come from US-based manufacturing, then you're either going to have to pay more goods in order to cover the wages to make that f
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It benefits everyone who wants to buy it, because:
a) as the Tim Cook himself said a few years ago, the iphone cannot be manufactured in the US, so it would probably be unavailable to buy at all, but even if it was somehow manufactured in some quantity,
b) it would be a lot cheaper to produce in China, so the people who buy it benefit from the lower price
It also benefits the US, because it frees resources that can be used more productively than cobbling iphones at a higher price.
Basic economics 101/2, surpris
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The reason it can't be manufactured in the US is that there simply aren't enough technically competent workers. And yes, you're already doomed, and it's only a matter of time until you realize you're now living in Somalia.
But Tim Cook is not a liar, and it doesn't matter if he wants to invest into manufacturing in the US or not. The US can't do it.
https://www.inc.com/glenn-leib... [inc.com]
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I don't see how manufacturing iPhone, a luxury item, in China benefits anyone in US other than Apple shareholders.
Well, lower manufacturing costs impact final consumer prices. I'm not sure Americans will be happy paying significantly more for their iPhones. Higher prices, either via US manufacturing or tariffs, will certainly lower unit sales and likely total revenue. And with Apple being such a stock market behemoth, a drop in AAPL will have additional impacts on the US economy.
Part of the manufacturing cost is labor, which is still cheaper in China compared to the US, even though Chinese labor costs have risen. H
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It benefits customers.
If you make the not unlikely assumption that Apple won’t accept lower margins moving production from China to here will make iPhones cost more. My guess is around 2x. It also will likely increase the cadence between new phones form 12 months to 14. It may also be hard to produce at the same rate, so look forward to shortages.
Even if you assume that Apple will be ok with taking a margin hit on it’s largest volume product even cutting the margins to zero might not be e
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Apple was the last US computer manufacturer to offshore production doing it in the early 2000s not the 1990s. That is part of how they almost went bankrupt, because customers do not like higher prices. So higher prices are definitely not an advantage in any useful way.
This. the concept that we'll rush out to buy more expensive things because of the Republican ideology that tariffs are the path to a new age of US built and bought - If it's too expensive, a lot of us simply won't buy anything at all.
Anyhow, I'm looking forward to the super high wages and incredibly inexpensive living that will happen when Orange Jesus and The ketamine smart guy usher in the new age of prosperity for America. Or maybe not.
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This. the concept that we'll rush out to buy more expensive things because of the Republican ideology that tariffs are the path to a new age of US built and bought - If it's too expensive, a lot of us simply won't buy anything at all.
Why is this a bad thing? If people by less stuff they don't really need perhaps that a step closer to saving the planet.
Also from https://www.investopedia.com/f... [investopedia.com]
The iPhone 15 is Apple's latest phone and comes in various iterations as previous models have. The iPhone 15 Pro, depending on storage size, costs between $999 and $1499. It's quite a hefty price tag, especially when it's estimated that the actual cost of all the components to make the phone amounts to approximately $558
I think apple have a lot of buffer if they really don't want to increase, prices of course they will because they can just blame Trump.
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Lowering consumer costs by seeking low wage assembly has been key to the success of many US firms
Just go into a Walmart and look at those inexpensive televisions, that is all assembled in Asia where wages are low
The US Economy is driven by consumer spending, and has seen strong growth for decades by providing consumers with low cost goods, that will change dramatically if consumer goods increase in price, particularly when consumers are worried about losing their jobs, social security and other government s
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It means the phones get made.
They can't be manufactured in the US. There aren't enough people with enough education and experience. Especially not now, with the war on education having raged for decades.
https://www.inc.com/glenn-leib... [inc.com]
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Walk around your home and list things NOT made in China.
How is that not a huge problem in need of solving?
The next hot war going to be fought with drone swarms. Do you think China going to continue supplying US in such scenario?
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It is a problem worth solving. The problem is with the current proposed solution as it seems to be designed to maximized damage to the American economy. A slow phase in of tariffs against China would make infinitely more sense as it would allow time for production to move to the US (or at least less objectionable countries) and supply chains to reorient before the tariffs become too big a deal. Instead everything has to be done right this second and we can see how well that's panning out in the stock market
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That's the way the political system is set up. Any elected politician is only guaranteed to be around for 4 years, after that they could be replaced. If something takes a long time to realise the benefits, then those benefits might materialise once the next guy takes office (and he'll get the credit for it because people have short memories), or the next guy could simply undo all the work.
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Meanwhile, phasing these tariffs on China in over 4 years would be a massive improvement over our current strategy of pointless surprise.
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Well a big problem with Trump is nothing he says is certain. While some sort of tariffs against China did seem assured given the shear amount of time he spent talking about it the exact amount and whether they truly would be across the board or whether there would be exceptions were always questions. Trump did not give the business world anywhere near enough details or time to figure out what they would do about them and that is reflected in our crashing stock market.
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Agree that tariffs against allies, like Canada, are stupid.
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How slow are we talking about? Tariffs against China started during Trump's 1st term. This is slow continuation of that.
Something on one hell of a longer time line then a large 10% bump in tariffs being formalized in February and then going into effect in March. The more years the better for our own economy's sake.
Agree that tariffs against allies, like Canada, are stupid.
Agreed.
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How is that not a huge problem in need of solving?
You'll naively continue to say that until it's your job being offshored. Then you'll get it.
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And if the locally made garbage costs 20% more to make, but the imported garbage has a 25% tariff then people will be buying the locally made garbage.
The whole point of the tariffs is to make local manufacturing viable.
Re: Why are iPhones made in China? (Score:2)
Labor costs are higher here, so not only will the prices not be lower, but it will be more cost effective to use more automation, so not many jobs will return either.
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Interesting side note, I was looking for a light for my kitchen and found the same manufacturer made the exact same light in Cambodia and China. Guess which one I'll purchase?
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Re: Why are iPhones made in China? (Score:2)
Some are assembled here, out of parts which all come from overseas.
They had months to stockpile (Score:3)
Not sure why they failed to prepare.
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Not sure why they voted for this. If it wasn't effecting the rest of us, I'd be laughing my ass off at these idiot CEOs that voted for him thinking he was blustering when the self-professed Tariff Guy kept saying he wanted to put tariffs on everything, and then once empowered to do so, starts tariffing everything.
"But I didn't think he'd do it! I thought it was just 'negotiating' or 'trolling'..."
Fuck you. No shortage of information showing he would, including THE LAST TIME HE WAS IN OFFICE AND FUCKED AR
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"Not sure why they failed to prepare."
Prepare for what? What tariff amount? On what goods? From what origin? Starting when? With what exemptions per importer? Is there even going to be a tariff?
How do you prepare for something that changes daily, if not hourly?
foxconn should of built that Wisconsin plant! (Score:4, Interesting)
foxconn should of built that Wisconsin plant!
There will be turmoil, but only for a bit (Score:2, Informative)
Things will eventually settle. Products will be made elsewhere. You may have to hold onto your iphone for *gasp* another year. That slave labor made band shirt from china might cost $5 more.
The point is, we need to level the playing field.
If they charge a tariff, so will we. Reciprocal. Simple. If country x drops their tariffs on us to 0, we will drop it to 0 and have true free trade. Up to them. The move is in their court.
I really don't see how this is a hard concept for people to grasp.
Re:There will be turmoil, but only for a bit (Score:4, Interesting)
Yes, let's show those countries that are "ripping us off" [citation needed] by taxing OURSELVES.
Keep sucking down that flavor-aid, bruh.
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In other words, if you make a foreign product more expensive, it hurts the exporting nation because people stop buying the product.
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Re: There will be turmoil, but only for a bit (Score:2)
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Well perhaps that will encourage companies to support free health care, you know like the rest of the world has. And at a fraction of the cost.
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You can't just move your production somewhere else. You need the supply chains for all the component parts. You end up shipping stuff all over the world, at extra cost and emitting extra CO2. It also makes manufacturing less efficient as it becomes harder to do just-in-time delivery. Then there are the skills, those often can't be moved and take time to develop in other places.
Trump's 4 years in office are not long enough for things to settle and costs to go back down. Tech is going to get more expensive, t
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Are you going to provide a better solution? If not, I'll thank you for not getting in the way of people who are trying to fix it.
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I'm not saying do nothing, I'm saying do it intelligently. This isn't going to happen quickly, so the kind of blanket tariffs that Trump is doing are causing more harm than good. Tariffs are the wrong tool anyway, you do this by making the country an attractive place to make stuff.
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Free trade just doesn't work when other countries have significantly lower costs.
Lower salaries, lower regulatory costs, lax safety and environmental rules, slave labor, child labor. All of these things make manufacturing much cheaper, and the only way to compete with them in a free trade environment would be to cut back all the things pushing up costs.
Are you happy to bring back slavery, and dump industrial waste into the nearest river?
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Are you happy to bring back slavery, and dump industrial waste into the nearest river?
Of course! This will Make America Great Again.
Re:There will be turmoil, but only for a bit (Score:5, Insightful)
It takes years and money to move a factory.
Let's say you want to build a factory. You found some land. You buy it. That can go through quick (a month, usually). Now you have to hire someone to design you a building. Usually takes a year or so to get everything you want locked down. Now you can apply for a building permit, which requires those plans, usually 6 months to a year.
You're at a year and a half in time. Now you build - you have to do site prep, which usually takes 5 months to get the ground levelled and all the utilities put in where you want them. Oh, and if they need to run new utilities, well that's another year or so to build out there. Then you can build your building, which is usually a 2 year process. Then after construction is done, comes outfitting, which takes another 6 months, at which point you're ready to occupy and can move in your machines.
Oh, 4 years is up already, you have a new president who decides that alienating our best trading partners isn't the right thing to do. And that forcing farmers to sell locally rather than overseas for more money isn't exactly the way to make money.
Now you have a move in ready building, but no use for it. You've just wasted millions of dollars.
OK, part 2, let's say you have an empty building ready to do. You need to renovate it to make it suitable for your purposes, so you still need to design new plans. Surveys, designs, etc, still take the better part of a year, and demo/reno permits are still 6 months. You're just under a year and a half, assuming you don't need utility upgrades. You renovate, takes a year, and you're at 2 and a half years into the term,
You move in the machines, and get everything ready, at the 3 year mark. Now who are you going to hire to fun the production lines? Depending on who you ask, either there are no workers available, or too many workers. The work is simple, so you're looking at unskilled labor. Well, hiring 200 unskilled people at minimum wage isn't easy, especially since there's no ready pool of it. You can hire away retail workers and restaurant workers, but those places need workers so they may raise their pay like the post-pandemic shortage.
You chased out all the mexicans and other illegals who would normally do the work, so you're still having an empty building with no one working in it at the rates you want to pay.
That's the problem - if you want to encourage local building, you can do it, but it takes time. And the whiplash being caused isn't helping. Especially since he seems to change his mind ever 5 minutes.
At this point, the best thing to do is... nothing. Don't spend your money until the dust settles, which can take a year or two. Or more. Once he actually has a policy he's going to stick with for more than a day, maybe it's time to make a move.
It's why businesses worry about climate change, and not the weather. A stormy day is no big deal. But if you can see over the horizon that stormy days are going to be more frequent, you can make investments for that.
Likewise, if you want to encourage business to build onshore, you encourage it - but you realize it has to be done over the course of a decade. We're not even 100 days in on Trump and things have been going every which way. No one's going to make any monetary investments at this rate.
It's why stocks and everything are down - Trump has decided the Bannon blitzkrieg is the way do things, but in doing so it's created so much chaos, the best move is not to play. Get your money out, park it in a safe investment vehicle like gold and then wait it out.
The US has only one key advantage over say, China. The US has a pile of consumers despite only having a quarter of the population of China. Americans love buying stuff, and that's why countries trade with the US.
Also, Trump things everything is transactional - but diplomacy is not. You know why USAID exists? It's because of the little red/white/blue flags emblazoned on the boxes of US made food that gets distributed to people in need. When you're hungry, you see that flag and it gets embedded in your mind that here's someone offering help. It's called soft power, and it's far better propaganda than you can imagine. It's why China has the "Belt and road" initiative - it's to sear the image of the yellow and red Chinese flag into people's mind. Now there is a transactional aspect to it (your country to vote in favor of China), but you want to convince the world of you.
It's why we have the red cross/crescent that universally means medical help, or why UN peacekeepers wear blue helmets on purpose.
You're right in that turmoil is only for a bit - 4 years or so, then maybe the great rebuilding will start
Toddlerized (Score:2)
At least ramp it up slower to give both sides time to adjust, say 5% a year. Donny just has no patience.
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"If they charge a tariff, so will we. Reciprocal."
If we charge tariff, so will they. Reciprocal.
"true free trade"
Tariff levels are only one component of what makes free trade, and not even the most important part. This is the same mistake the Brexiteers keep making.
"I really don't see how this is a hard concept for people to grasp."
You don't see how it's a hard concept because you keep getting it wrong.
for co-operating with Foxconn on manufacturing in (Score:2)
Manufacturing (Score:2)
but said there should be "more and more" manufacturing in the US.
Which was exactly the goal of the tariffs.
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Except nobody is uprooting their factories and supply chains and pay American wages when they can just tack on 25% to their prices.
Tariffs are a headacke even for finished products. (Score:2)
Samsung or SKHinix DRAM in your gadget? Tariff!
Micron DRAM in your gadget? A-OK=!
ARM or AMD processor made by TSMC in Taiwan? Tariff!
ARM or AMD processor made in the USoA by TSMC? A-OK!
IBM PowerPC in your mainframe made by samsung in Korea? Tariff!
NAND Flash SSD made by Samsung in Korea? Tariff!
NAND Flash made by Kioxia & Sandisk in Japan or by Micron in Idaho? A-OK.
Asemble in china, canada or mexico? Tariff!
Assemble in india, vietnam or Brazil? A-OK!
The problem was not the tariffs, or china, the proble
they call it a tax (Score:2)
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You'd almost think... (Score:2)
Why, you'd almost think that free trade is good and tariffs have never in the history of the world worked to make a country wealthier... seems like the stock market agrees.
Why would an outside manufacturer set up shop in the USA given the current climate of chaos, not to mention they'd probably end up paying tariffs on inputs like aluminum anyway and probably pay a lot more in salary and have much more difficulty finding skilled workers? Rather than risk billions by investing in US infrastructure, it make
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Interesting question. I supposed those fake accounts would post offtopic messages about something other than tariffs, in a discussion about the impact of tariffs.
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It's not unrelated. America is a bad position and China has a lot more leverage over American tech platforms than their management will admit because they can't possibly
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I think I've created 5 Reddit accounts in my lifetime until I left the site. One main one, one gaming one, two to talk about personal experiences, and one replacement for the main one when I figured it was time to wind it up. This is pretty common, most of posts to /r/AITAH are done by throwaways for example. Again, for obvious reasons - indeed, a tale tale sign that something is written by an LLM for that site is when it's not a throwaway because that means someone is farming for karma.
So you don't need to
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