Why even Donald Trump bows to the power of the iPhone

Globalization as we know is over and the world as we knew. This is Sir Keir Starmer's point of view and work, advanced during the past fortnight. The major declarations of the Prime Ministers seek to recognize and echo the vast and rapid changes in global trade and cooperation instituted by President Trump in recent weeks.

With his radical pricing announcements, Trump really seems to have called time for relatively free free decades around the world, especially between America and its rival up the superpower in Beijing.

There is only one problem. And it's probably in your pocket. Last Saturday, after raising prices on Chinese products in America at 145%, Trump made one of his usual half-tours, exempting smartphones and semiconductor chips from new functions.

It was a victory for Silicon Valley, proving the grip he can exercise in Trump's White House. But this has also demonstrated the limits of rhetoric and freedom to operate. He can launch at will the global trade wars in crusade, and it does not seem that the calls of Wall Street or the US Congress or longtime allies can arrest him. But Trump spoils with iPhone apples at his own risk.

The stock market markets crashed did not stop Trumps prices

Charly Triballeau / AFP / Getty Images

Globalization can be retired, but the product to which millions of us spend our stuck days, the brilliant rectangle which has become a completely essential part of our hours of watch, is entirely globalized, with a supply chain reaching Galicia in Taipei. And, above all, sitting at the heart of this supply chain, such as a power plant in an electrical network, is China, the very rival that Trump wants to bring to the heel.

Cheap as fleas

If you are looking for a monument to globalization, simply open the back of an iPhone (you will need a special screwdriver, of course). The reason why Apple sells a fifth of the world smartphones, but brings back four -fifths of profits, testifies to a supply chain that crisscrosses the globe, traveling almost all the line lines in geopolitics in the process.

One of the main reasons why Apple is estimated at 3 dollars and said $ 184 billion in profits last year is due to the way it carefully calibrated this production chain. Apple has pressed all the efforts of the possible supply chain, to the glue and the screws, explains Chris Miller, the author of Chip War.

But the iPhone supply chain is as fragile as it is profitable. Consider, for example, the trip of an iPhone micropuce, the small brochure less than half the size of a 5P part which feeds the supercaluler in our rear pockets.

To make a micropuce, white pieces of quartz are extracted in Galicia, Spain, before being merged in Berghausen, Germany. This polysilicon is then transported by plane to Oregon, in the United States, where a Japanese company transforms them into silicon slices, before it was shipped halfway in the world to Taiwan.

There, undoubtedly the most important company in the world, the Taiwan Semiconductor Manufacturing Company, or TSMC, takes these plates and, according to the conceptions of the British arm, belonging to Japanese, serious semiconductors using a machine made exclusively in the Netherlands.

A customer celebrates the purchase of the first iPhone16 in New York last year

Michael M. Santiago / Getty Images

The chip then takes place in Malaysia for inspection and wiring, before landing in Zhengzhou, China, nicknamed iPhone City where Foxconn workers belonging to the Taiwanese, paid 20 yuan per hour (about 2), attach it to the rest of the phone. All made from mine to motherboard for only 35 per chip.

The vulnerability of this supply chain to an economic or military shock is obvious. Taiwan, for example, is around 100 miles off the coast of China and Beijing does not hesitate to take control of the island in the years to come. If China blocked Taiwan, where almost 90% of the fastest fastest micropuces are made, the supply of apple fleas could collapse and the iPhone would get engaged in prices. Similarly, if the iPhone was swept away in the Chinese-American business war of Tit-For-Tat, as it was almost last weekend, it would climb again as a price.

Which is a result that any president would do well. There are approximately 150 million iPhone users in America, which represents almost 60% of the market (in Great Britain, its closest to 45%). This suggests that Americans spend about 300 billion hours a year using their iPhones. It is the essential consumer product, even Trump itself uses one.

For years, Apple has kept remarkably flat iPhones. An iPhone 16 costs $ 799 to the American customer, the same in dollars (and 20% less in real terms) than the iPhone 12 four years ago.

But gifler 145% prices in addition to production costs, and assuming that the beneficiary margins are the same as the iPhone could now cost $ 1,400. The price of a high -end iPhone Pro Max could have increased from $ 1,19 to $ 1,900, some estimates that put it more than $ 2,000. British consumers may not have been spared either: Apple tends to adopt a global pricing strategy to distribute costs.

A fabulous manufacturer?

Aware of its Microchip Achille heel, America has sought to produce flea on land in recent years, as part of the previous Trump and Biden administrations.

The US government has pushed, welded and intimidated the TSMC created by the former boss of Texas Instruments Morris Chang in 1987, and responsible for 15% of Taiwans GDP to build new factories in America.

TSMC conforms and is building three flea or fabs factories in Arizona, with potentially more to follow. One of them has been taking place since the start of the year, producing around 20.00 silicon wafers per month; Orders would have soaked since the start of pricing threats.

However, two things put this change in perspective. First, the chips that TSMC manufactures in Arizona are the variety of 4 nanometers (4 nm), where transistors are placed at four billionths of one meter from each other.

It seems powerfully impressive, and it is until you realize that the apples the latest phones and macbooks all use 3 nm chips. This Arizona factory will not start 3NM until 2028, when the last iPhones will use 2 Nm chips. The fastest tokens are always made in Taiwan, where most of the search for research lives.

The second point concerns the scale. When its three FAB operates, TSMC could be able to make chips from 60,000 trays per month in Arizona, but its world production is 1.3 million per month.

Chinese strangulation

Although it has made some efforts to diversify in India and Vietnam, the vast majority of Apple products are still made in China and the micropuce is far from the only component with a vulnerable supply chain.

Several elements of rare earths which include 17 elements in their own special section of the periodic table are also used to make an iPhone. Neodymium and dysprosium help vibrate the iPhone while Yttrium, Lanthanum and Prasyodymium make the colors on a living screen. The terbium is used in the speakers.

Many of these rare earths are extracted in China, which has a strict on the industry. And the exploration of rare earths is only the start of refining them is often the real challenge. They produce radioactive waste, pollution and require a lot of energy, which Western nations have moved away. Last year, China extracted more than two -thirds of all the world elements of rare land. The country is the main producer of yttrium as well as the neodymium and the terbium and controls 90% of the global supply of rare land.

There is only one mine of rare land in the American mountain pass in California, but at present, no treatment takes place. Now the United States has started looking elsewhere, including Greenland and Ukraine. But years ago behind China.

Rare Earth Rare at Mountain Pass, California

AP

Apple, done in America?

Could the iPhone be assembled realistically in America and not in China? The dependence of apples towards China dates back to the 1990s, when, in the words of Steve Jobs, the company was about 90 days to go bankrupt.

China was absolutely crucial for its recovery. In 2001, Apple negotiated a partnership with the Chinese government, which agreed to spend billions on new infrastructure for technology suppliers: not just factories, but roads, workers' houses and even a new airport.

In addition to Foxconn's final assembly factories, China has also helped finance the factories to provide parts (like many of these companies, even if they are based elsewhere, make manufacturing in China).

The director general of apples, Tim Cook or Tim Apple, as Trump called it, is always impatient to play for remodeling apples. In 2012, he promised that some computers were manufactured in the United States. But when a factory in Austin, Texas began to make Mac office computers of $ 3,000, the engineers hit a problem: a screw shortage. In China, neighboring factories can make huge amounts of personalized short -term screws, but their American counterparts depended on an entrepreneur who could only make 1,000 per day. The project was postponed for months (and Apple had to order China screws).

Apple still manufactures Macs in Texas and Cook promised that the company builds another Texan factory as part of an investment of $ 500 billion in America over the next four years (although some of these funds have already been committed).

But work is another obstacle to all ambitions for relocation. Up to two million Chinese workers are involved in the manufacture of Apple products approximately 2% of the country's manufacturing workforce. This includes many qualified engineers.

The construction of these products is more difficult work than American workers are used to it. Before the launch of the Big Apple product, Foxconn accelerates production in China in a way that would be difficult to get away in America, pushing hardly into extension and using temporary workers.

All this helps to explain why Trump flashes on smartphones prices last weekend. Globalization can take place, America and China can be on a collision course for a trade war or worse, but the 6 -inch supercaluler that has captivated the world can have other ideas.

Of course, Americans could use old phones or change brand. But no one, not even Trump, wants to be the only one to announce this news.

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