Apple (AAPL) Likely To Shift 'Negligible' Mac Production To U.S.: Analyst

December 07, 2012 03:31 PM

Stocks: AAPL, IHS,

(By Balachander) Apple Inc.'s (NASDAQ: AAPL) move to shift manufacturing of some Mac computers to the U.S. next year is likely to represent "neglible" part of production, according to information and analytics company IHS Inc. (NYSE: IHS).

Apple CEO Tim Cook said in a media interview that his company will shift manufacturing of one computer line from Asia to the United States starting next year.

Cook didn't outline where the manufacturing would happen or how much would be produced in the U.S.

But the scale and magnitude of the move is not expected to be major, according to IHS.

"The percentage of production likely to be shifted by Apple from Asia to the United States in 2013 is likely to be negligible, both for the company and for PC industry at large," said Craig Stice, senior principal analyst for computer systems at IHS.

Stice said 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.

"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," wrote Stice.

In the global PC market, Apple holds the sixth spot, with a 5.8 percent share of global shipments in the third quarter of 2012.

With the vast majority of PCs now being produced in Asia by contract manufacturers, Apple's move is unlikely to spur a major shift in production from Asia to the United States.

Apple makes extensive use of contact manufacturing services, with all of its production of notebook PCs outsourced to Quanta Computer Inc., Foxconn Electronics Inc. and occasionally Pegatron Corp.

The company also uses other Asia-based contract manufacturers, notably Foxconn, for production of its other popular product lines, the iPhone and iPad.

If Apple only moves production of one segment of its Macintosh product line, as reports indicate, IHS said the total shift in cost of goods sold (COGS) could amount to less than 1 percent in 2013. "Still, the move has some precedent in other circles," IHS said.

Jeffrey Wu, senior analyst for OEM research at IHS, said Apple would be less inclined to shift production of other, smaller products to the United States.

"I cannot imagine that Apple will transfer the manufacturing of its highly standardized and much slimmer products — i.e., iPhones, iPads and iPods —back to the United States in the near future," Wu added.

AAPL shares, which have been trading in the 52-week range of $377.68 to $705.07, retreated 2.96 percent to trade at $531.06 on Friday.

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Comments (2)


12/7/2012 4:59:02 PM Not "minor" - its flagship desktop by Mel Snyder What Tim Cook disclosed non Rock Center was already known to the very first customers who took delivery of their pre-ordered new 21.5 iMac: Apple has moved iMac production to the USA. Actually, it has likely expanded the U.S. facility at which nonstandard iMacs were customized in the past. I'm fascinated by Apple's choice to build this new iMac here. From nothing more than reports from the press conference, it appears the new iMac is of a design that sits between the technologic challenge of a conventional "box" desktop and a laptop. Historically, desktops were assembled from vendor-supplied motherboards and components - a process so simple machines could be built "while you wait" at a computer flea market. Laptops, by comparison, were vastly more difficult to assemble (and early ones virtually impossible to service). While iPhones and iPads will likely remain a China-assembly specialty for years - with iPads slaughtering the laptop market - the iMac may represent a significant revitalization of the desktop market. Vendors may be providing module subsystems for final Apple assembly. If you carefully listen to Tim Cook, you can pick up that Apple next assault is not simply on the TV set - its the *living room.* The knock-you-dead styling of the new iMacs may well be an attempt to get them into that space. One can ever imaging a larger screen than 27 inches for the many urban apartments in which such a system would be TV-equivalent. Therefore, I don't regard the domestic manufacture of the iMac as "negligible." As for iPhone/iPad manufacturing, one must recall how Asia garnered the montherboard market some 25 years ago because of labor costs. But at its peak, those motherboard came off high-precision automated assembly lines, where a dozen people replaced hundreds. As labor costs raise in China, investment in the automation of iPhone/iPad manufacturing becomes increasingly likely. Reply Rating: (5) (0)
12/7/2012 5:00:10 PM Not "minor" - its flagship desktop by Mel Snyder What Tim Cook disclosed non Rock Center was already known to the very first customers who took delivery of their pre-ordered new 21.5 iMac: Apple has moved iMac production to the USA. Actually, it has likely expanded the U.S. facility at which nonstandard iMacs were customized in the past. I'm fascinated by Apple's choice to build this new iMac here. From nothing more than reports from the press conference, it appears the new iMac is of a design that sits between the technologic challenge of a conventional "box" desktop and a laptop. Historically, desktops were assembled from vendor-supplied motherboards and components - a process so simple machines could be built "while you wait" at a computer flea market. Laptops, by comparison, were vastly more difficult to assemble (and early ones virtually impossible to service). While iPhones and iPads will likely remain a China-assembly specialty for years - with iPads slaughtering the laptop market - the iMac may represent a significant revitalization of the desktop market. Vendors may be providing module subsystems for final Apple assembly. If you carefully listen to Tim Cook, you can pick up that Apple next assault is not simply on the TV set - its the *living room.* The knock-you-dead styling of the new iMacs may well be an attempt to get them into that space. One can ever imaging a larger screen than 27 inches for the many urban apartments in which such a system would be TV-equivalent. Therefore, I don't regard the domestic manufacture of the iMac as "negligible." As for iPhone/iPad manufacturing, one must recall how Asia garnered the montherboard market some 25 years ago because of labor costs. But at its peak, those motherboard came off high-precision automated assembly lines, where a dozen people replaced hundreds. As labor costs raise in China, investment in the automation of iPhone/iPad manufacturing becomes increasingly likely. Reply Rating: (0) (1)

12/7/2012 4:59:02 PM

Not "minor" - its flagship desktop by Mel Snyder

What Tim Cook disclosed non Rock Center was already known to the very first customers who took delivery of their pre-ordered new 21.5 iMac: Apple has moved iMac production to the USA. Actually, it has likely expanded the U.S. facility at which nonstandard iMacs were customized in the past. I'm fascinated by Apple's choice to build this new iMac here. From nothing more than reports from the press conference, it appears the new iMac is of a design that sits between the technologic challenge of a conventional "box" desktop and a laptop. Historically, desktops were assembled from vendor-supplied motherboards and components - a process so simple machines could be built "while you wait" at a computer flea market. Laptops, by comparison, were vastly more difficult to assemble (and early ones virtually impossible to service). While iPhones and iPads will likely remain a China-assembly specialty for years - with iPads slaughtering the laptop market - the iMac may represent a significant revitalization of the desktop market. Vendors may be providing module subsystems for final Apple assembly. If you carefully listen to Tim Cook, you can pick up that Apple next assault is not simply on the TV set - its the ***living room.*** The knock-you-dead styling of the new iMacs may well be an attempt to get them into that space. One can ever imaging a larger screen than 27 inches for the many urban apartments in which such a system would be TV-equivalent. Therefore, I don't regard the domestic manufacture of the iMac as "negligible." As for iPhone/iPad manufacturing, one must recall how Asia garnered the montherboard market some 25 years ago because of labor costs. But at its peak, those motherboard came off high-precision automated assembly lines, where a dozen people replaced hundreds. As labor costs raise in China, investment in the automation of iPhone/iPad manufacturing becomes increasingly likely.

Rating: (5) (0)