President-Elect Trump pitched Tim Cook on iPhone production


President-Elect Trump in an interview with the New York Times:

I was honored yesterday, I got a call from Bill Gates, great call, we had a great conversation, I got a call from Tim Cook at Apple, and I said, 'Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States, where instead of going to China, and going to Vietnam, and going to the places that you go to, you're making your product right here.' He said, 'I understand that.' I said: 'I think we'll create the incentives for you, and I think you're going to do it. We're going for a very large tax cut for corporations, which you'll be happy about.'

Trump prides himself as a dealmaker, so it will be interesting to see how he can pursued companies like Apple to do things that may or may not be in its best interests. And then what will investors think about that.

As I understand it, the issue of creating iPhones domestically isn't just about costs. There's tooling shortages and capacity issues. Apple wants to have its major products refreshed for its biggest sales period in the last half of the year. As a result, it has to produce very large quantities in a short period of time. The alternative is stockpiling inventory for months or spending months catching up with demand. Either puts Apple at a competitive disadvantage as others companies come in with newer devices during peak sales times while Apple either can't fill orders or have aged products.

Also, it's unclear what would happen with any peak capacity when they Apple doesn't need it and what happens to all those workers.