What is the cost to make Smartphone in USA? $4


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CNN Money published interesting article which shocks the normal people but is not secret for these who do manufacturing, with the high level of automation is not so important where you actually manufacture high end devices – the cost to manufacture smartphone in USA is just $4.

If the high speed assembly lines run in China or USA the difference is not so big, the labor is used just to setup the machines and on the final control box assembly, all other operations cost about same.

Why then the production doesn’t move back to USA? There are advantages to manufacture locally like better logistic, etc. not speaking what sentimental touch will be the “Made in USA” label put on these devices.

The answer: the manufacturing labor in China now is more qualified and skilled than in Western World. Also the labor resources in China are in magnitude bigger than in Western world.

Foxconn can relocate hundreds of thousands of their workers from one line to other in no time and nobody will complain. The workers work and live in the factory dormitories – allowing flexible time and really quick manufacturing, something which would never happen in US or the Western Europe.

7 Comments (+add yours?)

  1. jha
    Aug 30, 2013 @ 16:49:55

    in short, many low salary workers in china are working hard to get a better life, in US and Europe, they have something called welfare instead, why bother.

    Reply

  2. ieusg
    Aug 30, 2013 @ 17:34:01

    The cost is not $4 but $4 more compared to the other location. Labour costs per device are $12 in the US compared to $8 in Asia. Here is the IHS iSuppli press release with more details: http://www.isuppli.com/Teardowns/News/Pages/US-Made-MotoXs-Cost-Comparable-to-Asian-Assembled-Smartphones-IHS-Teardown-Reveals.aspx

    Reply

    • OLIMEX Ltd
      Aug 30, 2013 @ 17:44:31

      thanks for the link! still $4 more is about 2% of the cost and not breaking the budged

      Reply

      • thinkfat
        Aug 30, 2013 @ 18:17:40

        spoken by someone who has never fought and lost a battle over 10¢ on the BOM😦 If you’re not dealing in luxury goods, $4 might actually be a good part of your net margin on the item.

      • OLIMEX Ltd
        Aug 30, 2013 @ 18:25:57

        smartphones are far away from 10c BOM issues with BOM around $200 they sell retail for $600

      • iekhsbd
        Aug 30, 2013 @ 19:30:00

        Sure, much it is not. Since it might also be of interest for readers here, I’d like to link to another breakdown of costs, this time for an Arduino Leonardo clone, that was recently on Indiegogo as a not-for-profit project, so claims to include nearly zero margin.

        Unfortunately, I was too late to get one of these boards, since the campaign ended earlier after the number of perks had unexpectedly been limited in order not to delay production (apparently, they had to buy all available ATmega32U4 they could get on the market, and there were only 15000 available). That’s why I had to look for other boards and so I became aware of Olimex products (not just your Leonardo compatible board). Not quite as cheap, but you also seem to put some extra thought into your boards and so maybe I can still start to learn about electronics on a reasonable budget.🙂

        Anyway, by their calculation, you can guess the margin that Arduino board sellers have. Must scroll down to see the BOM and component costs on the Indiegogo campaign site or use the Excel sheet from their own web site:

        http://www.indiegogo.com/projects/9-arduino-compatible-starter-kit-anyone-can-learn-electronics

        http://borderlesselectronics.org/igg/9duino_costs_breakdown.xls

  3. funlw65
    Aug 31, 2013 @ 01:42:30

    Still, they promised that “Made in USA” will be back soon. And, as I understand, is a target with high priority and not limited to smartphones only.

    Reply

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