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May 30, 2017

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Apple factory shift to US not trendsetter: report

TAIPEI--Apple Inc.'s decision to partially shift its production back to the United States is unlikely to trigger a trend of technology supply chains shifting their production bases due to the small scale of Apple's move, HSBC Securities said in a recent report.

Jenny Lai, head of equity research at HSBC Securities Taiwan, said the announcement made by Apple CEO Tim Cook was in response to the U.S. government's plan to create more job opportunities through manufacturing in the United States.

However, the shifting of one of Apple's iMac computer production lines back to the U.S., "is not going to emerge (as) an overall trend in tech manufacturing," Lai wrote in a Dec. 7 report.

Apple's move was unlikely to become a trend because most companies' personal computers, servers and television products meant for sales in the U.S. were already being produced in Mexico, which was closer to the American market, Lai said.

Moreover, Apple's initial investment of US$100 million in the U.S. iMac plant was "very small," and indicated that the new iMac plant was small and likely to be used only for a final assembly of PC and TV products, Lai said.

The new plant could also be used to produce "iTV" — a device that combines features from an iPad tablet with those of a television set — in the future, she added.

Both PCs and TVs were mostly assembled close to the sales location as their bigger size involved greater shipping costs, according to HSBC's report.

Lai said that as far as supply was concerned, Apple's production shift would benefit Taiwanese automation suppliers such as Delta Electronics Inc. and Hiwin Technologies Corp., since most manufacturing lines in the U.S. were highly automated in view of steep labor costs.

In a media interview published on Dec. 6, Apple's Cook said the company planned on shifting one of its Macintosh computer production lines back to the United States from China next year.

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