How The Cellphone Market Is Transforming | CNBC Marathon

The consumer electronics industry is shifting focus towards revitalizing American manufacturing, especially after the supply chain disruptions caused by the Covid-19 pandemic. BlackBerry's stock has drastically fallen from its peak, reflecting the changing landscape of smartphone usage in America, where 85% of the population now owns a smartphone. Despite this, there is a growing interest in 'dumb phones' as some consumers seek alternatives to smartphones.

China has dominated the manufacturing market, surpassing the U.S. in output since 2010. The U.S. is now looking to bring manufacturing back home, particularly in sectors like semiconductors and batteries. However, tech giants like Apple and Alphabet continue to rely on overseas production, raising questions about the feasibility of manufacturing smartphones in the U.S.

The history of U.S. manufacturing technology shows a decline since the 1960s, with many companies outsourcing production to countries like China. The current supply chain for smartphone manufacturing is heavily reliant on foreign labor, with companies sending engineers abroad to oversee production. This reliance complicates the push for domestic manufacturing.

Instrumental, a startup founded to improve manufacturing oversight, highlights the challenges of moving production back to the U.S. Despite some companies like Apple shifting some production to India, the lack of skilled labor and local supply chains in the U.S. remains a significant barrier to domestic smartphone manufacturing.

Labor costs in the U.S. are higher than in China, where wages are significantly lower. While some workers in China have seen wage increases, the overall cost of labor remains a concern for U.S. manufacturing. Apple claims to manufacture some components in the U.S., but the majority of production still occurs overseas, complicating the narrative of American manufacturing revival.

Google's attempt to manufacture smartphones in the U.S. with Motorola ended in failure due to high operating costs and low consumer demand. Experts suggest that the lack of skilled labor and the high cost of production in the U.S. make it difficult for companies to manufacture smartphones domestically.

Purism is one American company successfully manufacturing a smartphone in the U.S., the Librem 5 U.S.A., which is significantly more expensive than its Chinese counterpart. The company emphasizes the importance of domestic manufacturing for security and data protection, but faces challenges in scaling production and competing with cheaper alternatives.

The U.S. government is taking steps to support domestic manufacturing through initiatives like the CHIPS and Science Act, which aims to incentivize semiconductor production. However, rebuilding the manufacturing ecosystem in the U.S. will take time and investment, and challenges remain in creating a competitive environment for complex electronics like smartphones.