Posted on 04/10/2025 9:23:52 AM PDT by grundle
I asked Grok: “How much would an iPhone cost if all of the raw materials and ores, mining, refining, extraction, processing, design, programming, manufacturing, assembly, labor, and all other factors were done 100% entirely and exclusively in the United States?”
This is the answer that it gave:
Estimating the cost of an iPhone if every aspect—raw materials, mining, refining, extraction, processing, design, programming, manufacturing, assembly, labor, and all other factors—were done 100% in the United States is a complex task. It requires considering a wide range of variables, many of which depend on assumptions about supply chain restructuring, labor costs, infrastructure development, and economic feasibility. While precise figures are unavailable due to the speculative nature of such a scenario, I can provide a reasoned estimate based on available data and expert analyses.
Currently, an iPhone’s production cost (bill of materials plus assembly) ranges from approximately $400 to $558, depending on the model (e.g., iPhone 15 Pro Max costs around $558). This reflects manufacturing primarily in China, where labor costs are low (averaging $2–$10/hour), raw materials are sourced globally, and supply chains are optimized for scale and efficiency. Retail prices range from $799 to $1,499, incorporating research and development (R&D), software, marketing, and Apple’s profit margin (typically 60–62%).
Moving all production to the U.S. would significantly increase costs due to several factors:
1) Raw Materials and Mining: iPhones contain about 75 elements, including rare earths (e.g., neodymium, dysprosium), aluminum, gold, and silicon. The U.S. lacks domestic sources for many of these. For instance, China supplies 85% of global rare earths, and there are no bauxite mines for aluminum in the U.S. Establishing new mines and refining facilities would take years and billions in investment, driving up costs. Extracting and processing these materials domestically could increase raw material costs by 2–3 times due to higher environmental regulations, labor costs, and initial capital outlays. Current component costs (around $400–$500) might rise to $800–$1,500.
2) Labor Costs: U.S. manufacturing wages average $22–$30/hour, compared to $2–$10/hour in China. Assembly alone, currently estimated at $4–$10 per unit, could rise to $30–$112 per unit, depending on hours worked (e.g., 7–8 hours at U.S. rates). Total labor costs across mining, refining, and manufacturing could add hundreds more per unit, potentially $200–$500, given the need for skilled workers in a fully domestic supply chain.
3) Manufacturing and Infrastructure: The U.S. lacks the scale and expertise of China’s manufacturing hubs (e.g., Foxconn’s facilities). Building equivalent factories could cost billions, amortized over fewer units initially due to limited capacity. Analysts estimate this could add $50–$100 per unit in overhead. Automation might offset some labor costs, but the upfront investment would still elevate prices.
4) Design and Programming: Apple’s R&D and software development are already U.S.-based, costing billions annually (e.g., $18.75 billion in 2020). These fixed costs, spread across millions of units, wouldn’t change significantly per unit, but any expansion of domestic talent to replace overseas engineering could slightly increase expenses (e.g., 5–10% more, or $10–$20 per unit).
5) Scale and Supply Chain: China’s ecosystem allows for rapid, cost-efficient production (e.g., 500,000 iPhones daily). Replicating this in the U.S. would require decades and massive investment, reducing economies of scale. Some estimates suggest production might drop from hundreds of millions to single-digit millions annually, pushing per-unit costs higher. Extreme scenarios propose costs of $30,000–$100,000 if supply chains collapse and output shrinks drastically, though this assumes near-total inefficiency.
Combining these factors, a realistic middle-ground estimate emerges:
Raw materials and processing: $800–$1,500 (up from $400–$500).
Labor (mining, refining, assembly): $200–$500 (up from $10–$50).
Manufacturing overhead: $50–$100.
Design/programming: $10–$20 increase.
Total production cost: $1,060–$2,120 per unit.
With Apple’s current profit margins (e.g., 60%), retail prices could range from $1,700 to $3,400. However, some analysts suggest costs could climb higher—$2,400–$3,500 per unit—if supply chain inefficiencies persist, pushing retail prices to $4,000 or more. Extreme estimates of $30,000+ arise from scenarios where production scales down dramatically (e.g., to a few million units), but this seems unlikely given Apple’s ability to adapt.
” This reflects ... Apple’s profit margin (typically 60–62%).”
I think we’ve located room for some cost increases.
Hint: Companies don’t charge the total of their costs, but what the market will bear, for their products.
you could give it a better prompt, saying something like, assuming you are a US based supply chain expert, etc. (ie, to get a deeper, more well thought out professional answer...).
My personal opinion is that once American problem solvers put their minds to this, it will get done and the US based products will be competitive, very quickly....
Maybe I’m wrong, but that’s my opinion.
Fair enough, and they owe that to their shareholders...but if their customers start making preferences known....hmmmmm
Practically all the manufacturing of a smartphone can be automated, very few humans needed................
I think this is all so short sighted. If you bring a bunch of high paying jobs back and there are jobs for everyone who is willing to do the work and improve skills etc no one is going to care if it cost more because they’ll also have more. If my income grows i’ll pay more for things and I’d manage.
Is the article making the case for lower labor costs? I’m confused..because it certainly seems like it.
Seems like a good case for doing away with federal mandated minimum wage.
Which in turn reflects the cult-like adoration many have for the Apple brand.
Equine feces. We have all of those minerals, but many if not most are sequestered by environmental set-asides, distorting both strategic availability and price. Consider Chocolate Mountain.
Maybe just defaulting to the dad with the most known kids in the US today?
Yep. Give the working class decent wages again and they’ll be higher-level consumers. Henry Ford figured that out long ago.
Yep.
So we asked a big tech google search accumulator that presents the results in conversational style rather than as a list, with all the parameters set by big tech, what it would cost to force big tech to not built it in China?
No vested interest there, no sir...
“The U.S. lacks the scale and expertise of China’s manufacturing hubs “
This is a significant disadvantage in a war. And alone is enough reason to move manufacturing processes back here.
Well that is more costly but clearly not “The End of the World As We Know It”.
I was listening to Peter Zehan talking about the impact of technology on manufacturing and farming. He said, in the US and probably only in the US the cost of modernizing and robotizing the manufacturing process and farming process can be amortized. The market is big enough and the farms are large enough to make large scale industrialization possible. He recounted the story of a shirt factory moved from China, where it employed hundreds of people at sewing machines to a fully automated US facility with two employees on staff at any time. One loaded bolts of cloth and the other managed software. The facility produced shirts at a fraction of the cost of producing in China.
As for agriculture, advances in AI and video meant a machine rolling over the rows of food could instantly assess the needs of each plant spraying with insecticide, or nutrients as required. Essentially industrial scale gardening.
The entire supply chain would be shorter and therefore cheaper. As is shipping to the final market.
When we evaluate a change, we do so assuming all else remains constant.
Wonder what samsungs profit margin is
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