On March 24th, Micronet reported that US President Trump announced on the 22nd that it intends to use the '31 investigation' to restrict China’s trade and investment in the United States on a large scale. The United States arbitrarily waved a big stick of trade protectionism. .
In a heavyweight report released last March by Goldman Sachs, ''Made in China'' or ''Made in America'', pointed out that Trump’s proposal to let manufacturing back to the United States and a series of trade protection policies issued will trigger global supply chains. A major change in the pattern. The report uses the mobile phone industry as an example to conclude that the conclusion: The next smart phone purchased by American consumers will be more expensive.
Set Micronet now extracts and compiles the report as follows:
What will the return of mobile phone manufacturing bring to the United States?
In 2016, there were approximately 1.5 billion mobile phones sold globally (US sales of 175 million, or 12% in the United States), making smartphones the world’s largest sales volume and highest total value technology products. For smart phones, the supply chain is already Globalization, but manufacturing is mostly in Asia.
From the material cost point of view, taking the iPhone as an example, 15%-20% of the material costs are generated in the United States, and most of them are composed of design aspects. For example, the chip designs are designed by Apple, Qualcomm and Broadcom, but most of the chips are manufactured. Completed in Taiwan Semiconductor Manufacturing Co.
China occupies about 25%-35% of the iPhone's production costs, most of which are made up of back-end assembly costs, but also include parts made locally by foreign companies (such as Catcher, Samsung SDI, Foxconn, etc.) Japan and South Korea are also In key areas, these countries provide mainly memory and screens.
Today, more than 50% of the jobs are from the final assembly part. The labor cost in the United States is 14-25 dollars per hour, while in China it only needs 2-3 dollars per hour. Therefore, the cost increase mainly comes from the high-assembling part of the labor. Cost, and only the transformation of trade policies in the supply chain will not necessarily lead to more employment opportunities.
Therefore, if the mobile phone industry chain moves to the United States, the cost and labor supply will become two major challenges. It is estimated that the mobile phone industry's return to the United States will take about five years, and this will bring about significant changes in costs and prices.
If the U.S. government takes appropriate incentives (such as fiscal and taxation subsidies) and the degree of industrial automation increases, the cost of a U.S.-made smart phone product will increase when all supply chains return to the United States and operate effectively. 37%, this shift will cause the average cost of each iPhone in the hands of American consumers to increase by 135 US dollars.
If the factors of factory automation are excluded, assuming that workers can be recruited, then five years later, the United States will add 500,000 manufacturing jobs.
But the report also pointed out that the automation or the mobile phone will slash the traditional workers of this type of assembly line, but will create new engineering jobs. Some experts predict that automation or will cut 40-70% of workers on the last production line , But doing so also requires original equipment manufacturers to change product cycles and related designs for automation.
This picture can illustrate the impact of the smart phone industry's move back to the United States:
How does the smart phone supply chain migrate to the United States?
To realize the transfer of the supply chain to the United States, it is very important to play a good agglomeration effect. Aggregated companies can get good returns from the labor force and supplier side. When more suppliers gather in the same area, The effect will increase, which will make the supply chain effective and competitive. Over the past 25 years, this smart phone supply chain has been clustered in China.
The report pointed out that moving the final assembly part to the United States will be an important process that will open the transfer of the supply chain. The assembly part can attract parts suppliers. For non-semiconductor parts, suppliers prefer to be able to approach the assembly end, During the design period, it will be able to provide better service and speed of response. It is expected that the equipment part will bring 350,000-400,000 jobs to the United States. However, the report also pointed out that the assembly part may inhibit the United States because of high labor costs. Improvement of assembly level.
For other key parts of the smart phone industry chain, such as memory, display and battery, it is now possible to achieve a highly automated production process, which can be more easily realized in the United States. Most of the companies in this area come from Korea, Japan and Taiwan. If the United States adopts sufficient incentive policies (such as tax incentives, government subsidies, etc.), these companies will be willing to establish factories in the United States. However, the report also pointed out that for storage, it shows that industries with high investment and long-term investments increase costs. Relatively limited, the establishment of new factories in the short term may bring pressure on supply demand. For the semiconductor manufacturing sector, the potential for relocation to the United States may be minimal because of possible environmental protection and other aspects of supervision.
Considering the investments that have taken place in engineering and manufacturing systems for decades, the report believes that it will be very expensive to completely transfer the supply chain to the United States. With an annual average of 175 million smartphones sold in the United States, all domestic direct investment (not Counting sub-materials, including chemicals and raw materials, will require an investment of 300-350 billion U.S. dollars.
The report analysis pointed out that because of possible environmental protection and other aspects of supervision, semiconductor manufacturing transfer may be the most risky, and memory, screen, battery and other industrial chain links can be implemented after careful consideration of demand and supply. For the assembly part, It is also feasible if companies can guarantee the amount of committed labor.
Which companies will be at risk? Which companies will benefit from this?
The report pointed out that the border tax and tariff adjustment of the mobile phone industry will benefit the rise in the share prices of related listed companies in the United States. Asia's semiconductor manufacturers (TSMC, Hua Hong), packaging (ASE/SPIL) and foundries (Hon Hai, Wistron, Pegatron) ) may be affected by tax policy and face threats from US competitors, because customers like Apple may prefer domestic manufacturers.
American IDM manufacturers and manufacturers may benefit from this (Intel, Qorvo, TI), and for their customers, they will bring lower taxes. American assembly companies (Flex and Jabil) can also benefit from their Asian Competitors seize market share.
At the same time, the report anticipates that companies involved in the original product design, such as Apple, or the decline in demand caused by the increase in product prices will cause the stock price to fall. (Proofreading/Yecheon)
The following figure is a list of companies that may be affected and may benefit from this
