$1,000 iPhones? Price Warning Sounded as Component Maker Mulls U.S Investment

American homegrown iPhone production has just come a step closer after one of the world’s biggest product assemblers said it was mulling a $7 billion factory investment with Apple.

The announcement by Terry Gou, the founder and chairman of Taiwan’s Foxconn, came just days after Donald Trump continued to hammer home a protectionist policy stance during his inauguration ceremony.

The display-panel manufacturing facility, which also could make television screens, would create between 30,000 and 50,000 jobs, Gou told reporters Sunday, according to Japan’s Nikkei news service. “Apple is willing to invest in the facility together because they need the [panels] as well,” Gou said.

“Increasing protectionism would push up product prices—unless the Trump administration offers inducements to business such as concessions on land and electricity costs.

Smartphone display panels are getting bigger, meaning applying them in the U.S. could make better financial sense than paying to have pre-made products shipped from China, Gou said.

Foxconn has been thinking about building a new U.S. facility for years. Gou, however, said the issue came to the fore last month when his friend, Softbank CEO Masayoshi Son, met with Trump to pledge $50 billion of investment in the U.S.

News of the potential U.S. investment also comes after a Taiwanese delegation angered China by attending Trump’s inauguration, though there has been no suggestion that Foxconn’s decision is politically related.

Assembling iPhones in the U.S. could save on transport costs, though Gou warned that increasing protectionism more generally would ultimately push up product prices—unless the Trump administration offers inducements to business such as concessions on land and electricity costs.

“In the future, they may be paying some $500 more for U.S. products, but those will not necessarily work better than a $300 phone, ” he said. Apple’s latest model smartphone, the iPhone 7, currently retails in the U.S. from $649, according to the Californian company’s website.

Gou said Foxconn was also mulling the construction of a new moulding facility in Philadelphia and would consider shifting a display startup based in Canada to south of the border, given that Trump has pledged to renegotiate the North American Free Trade Agreement with Canada and Mexico. He didn’t specify what kind of impact such moves could have on product prices.

Other companies that have decided to shift jobs and facilities back to the U.S. since Trump’s election in November include Ford and United Technologies’ Carrier industrial air-conditioning unit.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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