Rick Martin · · 2 min readDispelling the Myth: US Doesn’t Lose Profit to China’s Apple Manufacturing
I came across this interesting piece over on Forbes today about who exactly benefits from the success of Apple’s (NASDAQ:AAPL) iPad and iPhone. Those devices remain among the top-selling devices on the planet (particularly the iPhone 4S and the iPad 2 this past year), and many assume that China profits by manufacturing the devices and most of their components.
While the original report is from back in July [1], I thought it was worth sharing as it does break some misconceptions about the effects of outsourcing manufacturing to China. The paper makes a number of key points:
- The US benefits most from the success of these products, as Apple keeps most of the profits
- High-wage processes like design, software development, and marketing are kept in the US
- There is “little value in electronics assembly” and bringing those jobs back to the USA would not do very much for the economy
You can check out the distribution value breakdown for both the iPhone and the iPad below. As you can see, the greatest segments are represented by Apple’s own profits and the cost of material inputs.
 Distribution of value for the iPhone 2010 - Click to Enlarge |
 Distribution of value for the iPad 2010 - Click to Enlarge |
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Capturing Value in Global Networks: Apple’s iPad and iPhone; Authors Kenneth L. Kraemer, Greg Linden, and Jason Dedrick; from University of California, Irvine, University of California, Berkeley and Syracuse University respectively. ↩
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