The price of Apple's supremacy

Apple’s twin cash cows – the iPhone and the iPad – are mowing down the competition at the moment but the profit comes at a cost.

The New York Times this week raises the issue in a couple of reports ("How the U.S. Lost Out on iPhone Work," "In China, Human Costs Are Built Into an iPad"). Churning out iPhones and iPads at the Foxconn plants in China is a lot cheaper than bringing the work back to the US in order to fill the ever increasing appetite of gadget hungry consumers.

The thing to remember is that the innovators are still firmly based in Cupertino, California and unsurprisingly they are the ones making the money.

This infographic, courtesy of, highlights just how big the gap is between US profits and the labor costs in the value chain for the popular devices.




In Apple’s defence, it isn’t the only tech giant using the same tactics to maximise profit and Apple has in recent times made a bigger push to ensure that there was some sort of code of safety at the facilities.

But making real change is difficult not because it might put innovation at risk but rather disrupt the existing dynamics between the company and its suppliers. The fact is the system works and if it ain’t broke don’t fix it.


InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles