iPhone: Made in USA

Mark Alpert, Fortune:

Here a robot that looks like a futuristic sewing machine places tiny capacitors and integrated circuits, rapid-fire, on a printed computer circuit board. A laser zeros in on each electrical connection. Two robot arms move in tandem, one selecting parts from a bin and the other deftly inserting them into the board. After 20 minutes the board reaches the end of the assembly line, where — finally — a real person steps in to check it. Robots outnumber people 13 to five on this line, which turns out the brains for aging whiz kid Steve Jobs’s new workstation. Not to save money: Labor accounts for only 3% to 5% of the cost of a typical computer-manufacturing operation. Instead, the automation is meant to ensure the highest possible quality.

This was written in 1990. I had to reread, “Labor accounts for only 3% to 5% of the cost of a typical computer manufacturing operation.” Can it be Foxconn is manufacturing iPhones and iPods instead of a state-of-the-art manufacturing facility in Silicon Valley to save a percent or two of manufacturing costs? No, that can’t be.

In Walter Isaacson’s Steve Jobs U.S. president Barack Obama met with Steve Jobs and asked him what it would take for Apple to manufacture in the U.S. His answer: skilled labor. But that doesn’t make sense to me either. From the quote above: “Robots outnumber people 13 to five”. The manufacturing staff totaled 40, so the number of robots were 104. These robots produced 60 NeXT motherboards per day. This was twenty two years ago and there have been significant advancements in robotics since then. For the sake of argument, let’s assume today a six to one robots to engineers ratio is possible, and 100 robots can manufacture 1000 motherboards a day.

Charles Duhigg and Keith Bradsher, The New York Times:

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. 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.

That’s 1.25 iPhones per day per worker; it doesn’t sound efficient at all. Based on my 1:10 robot to motherboard ratio, 1000 sophisticated robots could manufacture 10,000 iPhones a day, with just a flip of a switch. With a six to one robot to engineer ratio all Apple needs are about 170 top manufacturing engineers. But to meet today’s demand for iPhones and iPads Apple would need much more than that.

Apple sold 37 million iPhone in Q4’11. On a daily basis that would require 1.2 million iPhones to be manufactured. The corresponding number of robots and engineers required, based on my ratios, are 120,000 robots and 20,000 engineers. These numbers look doable. Yes, that’s just for the iPhone, but Apple could start local robot-based manufacturing with the iPhone.

And in the case of Corning’s Gorilla Glass, those would not need to be shipped across the globe to China; only a domestic hop from the plant in Harrodsburg, Kentucky to Silicon Valley, California would be needed. In a just-in-time manufacturing system a local supplier such as Corning would be more efficient and less costly.

A major concern is the availability of components, in terms of both physical proximity and turnaround time. Most electronic components are manufactured in Asia, but do they have to be? No. Take a look at Samsung: The company built a US$3.6 billion 1.6 million square foot factory in Austin, Texas to manufacture Apple’s A5 CPU.

In light of Samsung in Texas, a $3 billion investment toward a display manufacturing cluster, bringing all display component suppliers together, somewhere in the U.S. is doable. Apple has close to $100 billion in the bank. With advancements in material science technology the complete integration of all display-related components directly into the glass is a future possibility.

The advantage China currently has with component availability can eventually be met with advancements in specific technologies, developed in the U.S. and in particular Silicon Valley. Robotics and other manufacturing technologies can be used to replace a significant portion of repetitive and dehumanizing work. By looking back at NeXT and the old Apple I see potential in a future where some if not all iPhones, iPads, and Macs are manufactured in the U.S.

Update: Apple should make the iPad in the U.S., pronto.