Supply Chain for iPhone Highlights Costs in China

From the New York Times:

Last month, while enthusiastic consumers were playing with their new iPhone 4, researchers in Silicon Valley were engaged in something more serious.

They cracked open the phone’s shell and started analyzing the new model’s components, trying to unmask the of Apple’s main suppliers. These “teardown reports” provide a glimpse into a company’s manufacturing.

What the latest analysis shows is that the smallest part of Apple’s costs are here in , where assembly-line workers snap together things like microchips from and Korea, American-made chips that pull in Wi-Fi or cellphone signals, a touch-screen module from Taiwan and more than 100 other components.

But what does not reveal is that manufacturing in China is about to get far more expensive. Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising costs are all threatening to sharply increase the cost of making devices like notebook , digital cameras and smartphones.

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