The Trump smartphone will probably be made in China and subject to administration prices
Analysts and supply chain experts are not sold on the Trump organization praising its new smartphone as “built in the United States”, saying it is much more likely that the $ 499 device will really be produced in China.
The Trump organization, the Trump’s real estate, hospitality and entertainment conglomerate, announced on Monday that it would lead its name to a wireless service called Trump Mobile and its “T1” golden color smartphone scheduled for a version of August. The device will use a Liberty Wireless lifted wireless supplier and will operate on the Google Android operating system.
The Trump organization’s announcement presented phones as “proudly designed and built in the United States”, but analysts have said it is more likely that the conglomerate outsourced manufacturing capacities to an original apparatus (ODM) manufacturer abroad, the least in the short term, because the United States does not have the manufacturing capacities to build the phone.
“Despite being announced as an American manufacturing phone, it is likely that this device will initially be produced by a Chinese ODM,” said Blake Przesmicki, analyst at Tounterpoint Research, in a note published on Monday.
Even if the United States had smartphones production capacities, he said, the company should count on imported overseas components.
The Trump organization did not respond to FortuneComment request.
The executive vice-president of the organization of Trump, Eric Trump, for his part, admitted that Trump Mobile would not be initially an entirely national company.
“Finally, all phones can be built in the United States of America,” said Trump on The Benny Show Podcast on Monday, suggesting that the device is produced or assembled abroad before its August launch.
Manufacturing limitations
President Donald Trump tried to skip domestic manufacturing by imposing radical rates, but experts have long warned of the production limits of the United States. Apple, for example, has set up its supply chain in China in the 1990s, and displacement would require extensive supply substitutions and increased labor costs that would result in the cost of an American manufacturing iPhone at more than $ 3,000, said Dan Ives, Wedbush Securities analyst, said previously.
These obstacles to the expansion of American production are almost universal in the industry, according to Przesmicki.
“Generally, no phone has been made in the United States for more than a decade,” said Przesmicki Fortune. “We have lower supply chains, fewer employees competent in the smartphones sector, weaker margins.”
Przesmicki suggested that if Trump brand manufacturing should take place on American soil, it would be on a small scale, around 1,000 phones or less. Leo Gebbie, principal analyst at CCS Insight, said Fortune There is “no serious chance” that the Trump organization organized for the American production of T1 telephones, especially before the launch of August for the American production.
“The idea that this could be reproduced in the United States in any kind of short and medium-term time scale is fanciful,” said Gebbie. “It’s a dream of absolute pipe.”
Instead, according to Gebbie, T1 phones will probably have their final assembly stage in the United States, which would allow the company to avoid high investments in interior manufacturing by simply all components. This strategy, he said, could be closer to what the Trump organization wanted when it praised the phones “built” in the United States
Trump is not immune to his own prices
The importation of telephone components, the majority of which is made in China, would provide another hiccup from the Trump organization chain by making it sensitive to the prices that Trump imposed in order to discourage trade with China.
“It absolutely raises the spectrum of the Trump Mobile organization which falls against the prices that have been encouraged by the Trump administration,” said Gebbie.
“In the end, that we were talking about screens, that we were talking about camera technologies, that we were talking about chipsets and processors and smartphones, almost all of this comes from the same manufacturing centers in Asia,” he added.
The president last month threatened a 25% rate on non -produced smartphones in the United States and castigated Apple for producing its iPhone in India – where it is about 20% of its total production. Trump warned that he would impose a 25% levy on Apple products if the company does not move manufacturing in the United States
Apple announced in February that it would invest $ 500 billion in the expansion of American factories over the next four years.
Gebbie suggested that the emphasis on Trump on the construction of his phone in the United States – despite domestic manufacturing, it is unlikely – sends a message to large companies that the assembly of American smartphones is possible.
“Maybe this provides a lever effect to the Trump administration to go out with apparatus manufacturers like Apple and Samsung and say:” Hey, we are marking smartphones in the United States, why right? “” Said Gebbie.
