Apple takes a small step back to its US home

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Apple will move manufacturing of some Mac computers back to the US next year, the first time in more than a decade that its products will be made as well as designed in America, its chief executive said on Thursday.

Tim Cook, Apple chief, said he would invest more than $100m in returning a small portion of manufacturing to the US in 2013.

The news tempered losses on Apple's stock, which fell more than 6 per cent on Wednesday, amid a range of fears that include a potential increase in US taxation of Apple’s overseas profits. After opening 2 per cent lower on Thursday, taking its valuation below $500bn for the first time since March, Apple shares closed up 1.57 per cent to $547.24.

Most of Apple's products are made in China by Hon Hai Precision, better known by its trade name Foxconn. Apple has invested billions of dollars into its Asian supply chain over the past year as it prepared for this autumn’s simultaneous launch of an updated range of iPhones, iPads and Mac computers.

Some components of its iPhone and iPad are made in the US. Mr Cook told Bloomberg Business Week: “Next year we are going to bring some production to the US on the Mac. We’ve been working on this for a long time, and we were getting closer to it. It will happen in 2013.”

For some years, Apple has assembled “built to order” Macs for a small number of customers in the US, but Mr Cook said that these latest plans would be “more substantial”. “This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money,” he said.

In a separate interview with NBC’s Rock Center, to be broadcast on Thursday evening, Mr Cook said it would be difficult to move all of its manufacturing back from China.

“Honestly, it’s not so much about price, it’s about the skills etc,” he said. “Over time, there are skills that are associated with manufacturing that have left the US. Not necessarily people, but the education system stopped producing them . . . The consumer electronics world was really never here. It’s a matter of starting it here.”

Analysts said the move could help Apple protect its intellectual property.

“For the first time since the 90s, Apple is taking steps to control the last pieces of the value chain it participates in,” said Horace Dediu, mobile industry analyst at Asymco.

“It’s a baby step and perhaps it’s going to remain symbolic, but one can imagine a trajectory for this effort which will pay off, as well as retail has paid off 10 years after the first Apple store opened.”

Mr Cook said he hoped Apple’s moves to audit its supply chain would nudge others to do the same. In January, Apple joined the Fair Labor Association, which after conducting audits said in August that Foxconn had made many of the “necessary changes” to working hours and employee safety.

“Our transparency in supplier responsibility is an example of recognising that the more transparent we are, the bigger difference we would make,” Mr Cook told Business Week. “We want to be as innovative with supply responsibility as we are with our products . . . The more it’s in the public space, the more other companies will decide to do something similar.”

Apple has nonetheless sustained criticism from other campaign groups such as China Labor Watch, which said in August that “harsh working conditions” existed throughout Apple’s supply chain, beyond just Foxconn.

Samsung, which also received criticism from China Labor Watch, last month released the results of a four-week investigation into its suppliers. Samsung found “several instances of inadequate practices at the facilities”, which Samsung said it would take “immediate and appropriate steps” to correct.

Elsewhere in the interviews, Mr Cook hinted that Apple is still working on a new television device, which analysts have long speculated would be its next area of expansion after smartphones and tablets.

“When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years,” Mr Cook told NBC. “It’s an area of intense interest. I can’t say more than that.”

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