Google's Motorola Mobility is marketing its new flagship Moto X smartphone as being made-in-the-USA, but that label mainly applies to what's on the surface.
A look inside the Moto X, which went on sale in North America last month, shows that nearly all of its parts were built in Asia or Europe. Market researcher IHS published a list of the phone's components last week based on a teardown of the hardware.
"If people are somehow thinking that 'made in America' is American top to bottom, they don't understand the electronics supply chain," IHS analyst Andrew Rassweiler said in an interview. "You've got three flags planted, possibly, in even one piece of silicon."
For decades, hardware makers have moved production to countries where labor costs are lower, primarily in Asia. The chip industry followed when governments and conglomerates in Japan, Taiwan and South Korea invested heavily to create chipmakers. The industry trend is overwhelmingly toward geographic dispersion and interdependence.
President Barack Obama has been calling for electronics companies to relocate manufacturing operations to the U.S., and Apple, Google and Lenovo Group have committed to assemble some products there. Motorola proudly calls the Moto X "the first smartphone ever to be designed and assembled in the U.S.A." The device is put together at a factory in Fort Worth, Texas, which will employ about 2,000 people, according to the company.
That's 2,000 jobs that America wouldn't have had otherwise, but it's tiny compared to the 1.3 million or so employees who work at Hon Hai Precision Industry, part of the Foxconn Technology Group. Assembly accounts for just 5% of the total cost of building each Moto X unit, according to IHS. At $12 a device, U.S. assembly is slightly more expensive than doing it in Asia, but components still represent the vast majority of the $226 price of making each phone.
Assembling in the U.S. has advantages beyond making Motorola seem patriotic. It helps the Google subsidiary to more quickly ship made-to-order hardware to AT&T customers who personalize their Moto X phones with colored plastic or wooden backs, said Mark Randall, the company's senior vice president of supply chain and operations.
"We're proud that Moto X is designed, engineered and assembled in the USA, but our decision to assemble here was also rooted in providing the best possible experience for consumers," Randall wrote in an emailed statement. "Assembling in the USA enables consumers in the USA to design their customized Moto X smartphones online and receive them in just a few days."
Nobody cares what color the memory chip is inside their phone, so that incentive doesn't apply to components. The Moto X uses memory made by Samsung Electronics and SK Hynix, both based in South Korea, according to IHS and a separate teardown analysis by researcher IFixit. (Device makers often buy the same part from multiple companies to help negotiate better pricing.)
Samsung also supplies the Moto X's screen, IHS said. The display, along with the companion touchscreen sensor, costs $66, accounting for the biggest chunk of the phone's total cost. Good luck finding someplace that builds one of those in the U.S., said Rassweiler, the IHS analyst. "I'm unaware of any display-making facility in the U.S."
Qualcomm supplies several of the parts inside the Moto X, including chips that connect to cellular networks, run software, manage sound processing and access Wi-Fi, IHS said. While Qualcomm is based in San Diego and designs its chips in the U.S., it outsources production to Taiwan Semiconductor Manufacturing and GlobalFoundries, a California-based contractor that's wholly owned by the Abu Dhabi government and does most of its manufacturing in Dresden, Germany.
The Moto X's accelerometer, microphone and near-field communications chips: probably all made outside of the U.S.
The most striking thing about the Moto X is how similar its guts are to smartphones made elsewhere in the world, Rassweiler said. While it's impossible to tell exactly how many of the components are U.S.-made, it probably amounts to little more than 15%, he said.
The Moto X is about as American as apple kimchi.
Image: Mashable, Meghan Uno
This article originally published at Bloomberg here
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