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Apple Supplier Foxconn Confirms Plans Of US Expansion: iPhone Price Could Go Up And Here's Why

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Foxconn Technology Group, Apple's assembly partner for iPhone and other devices, confirmed its plan to expand operations in the United States.

The majority of Apple products are made in China but some items are still U.S. made. Now, a significant number of Apple devices could be made in its home country.

"We can confirm that we are in preliminary discussions regarding a potential investment that would represent an expansion of our current U.S. operations," says a Foxconn statement.

Why Foxconn Is Expanding

Foxconn's statement comes amid President-elect Donald Trump's push of bringing back manufacturing in the United States. During the 2016 presidential campaign, Trump vowed to get Apple to start making the devices in the country.

The Taiwanese company's main business is assembly of electronics such as the iPhone, and Apple is Foxconn's biggest customer. U.S. expansion assures business from Apple and Trump's bid to get manufacturing back in the country may help Foxconn strike deals with other U.S. companies.

Foxconn is also investing in other tech sectors such as robotics, e-commerce and more. It is not clear which sectors Foxconn plans to expand its operations in the United States.

The statement from Foxconn came a day after Masayoshi Son, the CEO of Softbank, met with Trump and pledged to invest $50 billion in the United States and create 50,000 new jobs in the country. Son and Terry Gou, the chairman of Foxconn, have mutually collaborated in many investments. Moreover, Son was spotted holding documents that had Foxconn logo beside Softbank's logo, which suggests Foxconn is also expected to invest a lot in the United States. However, Foxconn has not revealed details of its investment expansion.

"While the scope of the potential investment has not been determined, we will announce the details of any plans following the completion of direct discussions between our leadership and the relevant U.S. officials," said Foxconn. "Those plans would be made based on mutually-agreed terms."

iPhone Assembly In The United States May Increase The Price Of The Smartphone

Analysts believe that the cost of labor in the country will increase the production cost of iPhones. The base model of the iPhone 7 has a retail price tag of $649. However, the manufacturing cost of the device is $224.80. The labor cost included in this price is about $10.

However, if Foxconn starts producing iPhones in its home country, the manufacturing cost is expected to rise by an additional $30 to $40 because of additional labor costs involved.

An increase in the manufacturing cost of the iPhone may be passed over to the consumer, which means they would have to pay more for the next-gen iPhones.

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