* Some Mac production coming back to US from China-CEO Cook
* Says plans to spend over $100 mln to build computers in US
By Edwin Chan and Nicola Leske
SAN FRANCISCO/NEW YORK, Dec 6 Apple Inc
plans to move some production of Macintosh computers to the
United States from China next year, Chief Executive Tim Cook
said in remarks published on Thursday, in what could be a
important test of the nascent comeback in U.S. electronics
Apple makes the majority of its products, from Macs to the
iPhone and iPad, in China, the world's factory floor for
electronics. But like other U.S. corporations, it has come under
fire for relying on low-cost Asian labor and contributing to the
decline of the U.S. manufacturing sector.
Cook did not say which Macintosh products will be produced
in the United States. But the effort is expected to go well
beyond simple final assembly of devices, with Apple and unnamed
partners building most or all of the components in the United
States as well.
The company will spend more than $100 million on the U.S.
manufacturing initiative, Cook said in an interview with
Bloomberg Businessweek, published on Thursday.
"This doesn't mean that Apple will do it ourselves, but
we'll be working with people and we'll be investing our money,"
He told NBC's "Rock Center" program, in an interview to be
aired later Thursday, that only one of the existing Mac product
lines would be manufactured exclusively in the United States.
Apple declined to comment beyond the interview.
Apple's decision, hailed by some analysts as an important
first step even if it affected a tiny fraction of its overall
output, was dismissed by others who saw it as an opportunistic
public relations ploy with little effect on jobs.
Some Apple suppliers were struggling to assess its impact.
"At the end of the day, Apple knows moving production to the
U.S. means lower profits for Apple," said a senior executive at
Taiwan's Quanta Computer Inc who declined to be named
because of the companies' business relationship.
"If Apple is really serious about moving production to the
U.S., they would need to invest 10 times or even 100 times of
that amount. We see only a minor impact on Apple suppliers."
Cross Research analyst Shannon Cross said it made sense for
Apple to bring some manufacturing back to the United States,
because some components were already being produced there.
Also, while cheaper labor costs have been a key factor in
encouraging U.S. manufacturers to move production to China,
wages and other costs have risen sharply - particularly in the
main coastal manufacturing centers. Labor costs, moreover,
account for only a tiny portion of overall expenses: the
research firm iSupply says the total cost, including labor, for
final manufacturing of an iPhone 5 is just $8.
Experts estimate that the total base cost of all components
that go into the gadget, or bill of materials, comes to around
Cross pointed to other potential benefits of U.S.
manufacturing, including mitigating the risk of intellectual
Cook has said in the past that he would like to see more of
the company's products assembled back home, but declining U.S.
manufacturing expertise made that difficult. Apple makes
applications processors for the iPad and iPhone via Samsung
Electronics in Austin, Texas, and sources glass for
the same devices from a Corning facility in Kentucky.
IHS iSuppli, a research firm that tracks supply chains, said
the company now outsources production of notebook personal
computers to Taiwan's Quanta Inc and Foxconn, which
also makes the iPhone and iPad, and Pegatron Corp.
Foxconn and Quanta have U.S. facilities.
"Apple's move appears to be a symbolic effort to help
improve its public image, which has been battered in recent
years by reports of labor issues at its contract manufacturing
partners in Asia," Craig Stice, senior principal analyst for
computer systems at His. "However, given Apple's high profile in
the market, the company's 'insourcing' initiative could compel
other companies to follow suit and transfer production to the
United States over the next few years."
Apple's stock rose 1.6 percent on Thursday, a tepid
bounceback from Wednesday's 6.4 percent dive that was its
biggest single-day loss in almost four years.
Analysts say the stock, which has fallen steadily since
September, has come under pressure from investors worried about
the rapidly intensifying competition from Google Inc's
Samsung, in particular, has emerged as a formidable
competitor, chipping away at Apple's dominance in the tablet
market and leading the smartphone pack in China, where the U.S.
company's smartphone market ranking fell to No. 6 in the third
quarter from No. 4 in the previous three months, research outfit
Samsung's stock has climbed 8 percent since the end of
Apple's domestic manufacturing effort will likely buy the
brand some goodwill at home, where the debate about off-shoring
has heated up as the economy sputters along. It has also come
under fire for excessive working hours and dismal conditions at
Foxconn's plants in China, and critics have accused Apple of
helping to create a high-stress environment for migrant workers.
Beyond the marketing boost, some analysts said Apple could
blaze a trail should it prove that American manufacturing of
electronics can be profitable.
"It seems to me like a nice time for Apple to do something,"
Gartner analyst Carolina Milanesi said. "If it can be a
profitable business, and others follow, then Apple has shown the
Others were skeptical that Apple's latest move was much more
than a symbolic gesture.
"Such a strategy has been used by other companies in the
past, which had no actual impact on their outsourcing," said Li
Qiang, director of New York-based China Labor Watch, in an
"The key question is how many jobs (percentage of the entire
workforce) and what kind of jobs (production or administration)
are to be moved back. I don't think Apple is ready to relocate a
large percentage of its production jobs back to U.S."
Earlier this year, Google made waves when it announced it
would build its Nexus Q home entertainment streaming device -
deemed by many analysts to be an experimental product - in the
heart of Silicon Valley. Google said it hoped to speed up
innovation on the device and improve time-to-market.
Lenovo Group Ltd - China's largest PC maker - said
this year it will move a limited amount of computer
manufacturing to North Carolina, to be closer to the market.
"Lenovo's announcement appears to have flown under the
radar," said Jeffrey Wu, senior analyst for OEM research at IHS.
"Apple is a company that is always in the spotlight, and the
company's image sets the standard in the PC world. If Apple is
doing it, will others follow?"