Who Benefits From Apple's Renewed Patriotism?
Aside from a handful of iMacs, it's been many years since Apple assembled products right here in the U.S. That's all about to change though, once the new Mac Pro enters production. The company unveiled the new professional desktop earlier this week, and touted the fact that it will be assembled domestically as a show of renewed patriotism.
CEO Tim Cook previously said that Apple was investing $100 million to make that happen, and the transition marks a shift away from Asian contract manufacturers like Foxconn and Pegatron, among others, who draw plenty of negative attention at Apple's expense.
Which contract manufacturer will benefit? China's Economic Daily News pegs Flextronics as a winner. Foxconn will no longer manufacture the Mac Pro, with Flextronics picking up the win, according to KGI Securities analyst Ming-Chi Kuo.
This isn't new business for Flextronics, as in its 10-K it already names Apple as one of its largest customers for last fiscal year, simply saying it builds "smartphones, notebooks and desktop computing, tablets and consumer entertainment devices" for Cupertino. This would just be growing its existing relationship with Apple, while geographically diversifying its business a little more. Half of revenue last year was generated in Asia, with 31% coming from its Americas segment.
Within the U.S., Flextronics has operations in California, Texas, and Kentucky, among other states. Apple specifically mentions Texas and Kentucky as contributing to Mac Pro assembly.
With the domestic job market still in recovery, prominent companies have been under political pressure to bring manufacturing jobs back home. When asked by President Obama, Steve Jobs made it very clear that "those jobs aren't coming back," in part because the U.S. has less supply of that particular level of engineering talent relative to countries like China.
Cook obviously feels somewhat differently on the matter, and he made it very clear during Apple's tax grilling that he wants to do whatever is in his power to help the U.S. economy. The Mac Pro isn't a large volume business, but it should garner incremental gains for Flextronics while Apple earns some political goodwill in the process.
The article Who Benefits From Apple's Renewed Patriotism? originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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