The NY Times just published an absolutely fascinating piece on Apple and why it builds almost all of its stuff in China. Go read it.  Clearly some of our politicians could learn a lot from it.

The short of it is that companies like Apple simply cannot manufacture products in the United States.  The cost (though it is cheaper in China) is not the reason, however.  Years ago, the Chinese government subsidized building cities of factories that can hire 3,000 workers to live in a dorm per day —or 8,700 Industrial Engineers in two weeks (it would take 9 months to do this in the U.S.).  Today’s gadgets require thousands of little parts that are all made in the same areas.  This whole global supply chain cannot be moved to the U.S.

The most interesting tale might have been the last minute decision to make the iPhone’s display glass:

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

 New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

Other notable tidbits:

  • Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
  • Various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense.
  • “Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
  • At the Silicon Valley Summit: “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”

Interestingly, the biggest piece of the iPhone made in the U.S. is the processor, which is manufactured in Texas.

By Samsung.

  • No more iPhones in Beijing and Shanghai ‘for the time being’, Apple warns as analysts criticize China launch delays (9to5mac.com)
  • iPhone 4S supply chain explained: The winners and losers (9to5mac.com)