Apple Faces Supply Chain Hurdles in US Relocation Efforts

Apple Inc. faces significant hurdles in relocating its manufacturing operations to the United States in response to tariffs imposed by the Trump administration, according to former Intel CEO Pat Gelsinger. The process of shifting supply chains is intricate and time-consuming, involving the relocation of numerous interconnected companies that support the production of Apple's products.

Gelsinger explained that the supply chain for Apple's products is deeply embedded in various regions around the world, a phenomenon he described as "sedimentation." This process, he noted, takes decades to develop and cannot be easily reversed. "You start a factory in one place, and then the plastic company builds next to it, followed by the resistor company, and then the display company," Gelsinger said in an interview. "So, the other links in the supply chain start to cluster around the core link, and they sediment in those places. And that sedimentation process takes decades."

The former Intel CEO emphasized that relocating the supply chain back to the United States would incur significant costs. "They won't come back just because you ask them to. Only when you create economic incentives, funding, and capacity to bring them back, will they come back," he added.

Experts warn that tariff policies could drive up the prices of Apple's products, including the iPhone, Mac, and AirPods. This price increase could dampen demand and continue to put pressure on Apple's stock, which has already fallen by 22% this year. The economic slowdown in key markets, exacerbated by the trade war, could further impact consumer spending and Apple's revenue.

In February, Apple announced a $500 billion investment in the United States, primarily for a new manufacturing facility in Houston to produce servers supporting Apple Intelligence services. However, this investment did not include plans to manufacture consumer hardware products in the United States. Apple CEO Tim Cook had previously cited skill gaps in the U.S. as a barrier to producing Apple products domestically. "Listening, assembling an iPhone doesn't require a PhD in mechanical engineering," U.S. Treasury Secretary Steven Mnuchin responded to Cook's comments in an interview. "So, I'm not sure why Tim Cook said there aren't workers with the appropriate skills here."