How a $2k 'Made in the USA' Phone Is Manufactured

I&#x27;m surprised that they admitted that their cost to produce the phone in China is $550 and they sell it for $799, while the cost to produce the phone in the US is $650 and they sell it for $2000. That&#x27;s a 45% markup on one and 207% markup on the other.<p>Taking just those figures in mind, they shouldn&#x27;t be at all worried about tariffs - anything more than an 18% tariff, it&#x27;s cheaper for them to build in the US than China for US customers. Honestly, that&#x27;s much lower than I expected, especially considering they&#x27;re even more restrictive in their component sourcing than most companies would need to be because they&#x27;re catering to a security-focused group.<p>I guess the real issue is that they don&#x27;t have any more production capacity in the US, rather than it just being a cost issue.

The important quote: &quot;If the tariff from China is 100%, and you know it is going to be 100 % for the next 10 years, you will make a different business decision than if it is, ‘Might be 100%, not sure what&#x27;s going to be in three months, what&#x27;s it going to be in a year from now, and what&#x27;s it going to be in three years from now.’ That uncertainty does not create stable markets. It does not create very accurate business decisions.&quot;

As one of the “skilled electronics engineers” in the US you could count on US soil (whatever that means) I can tell you this article reads very strangely to a EE.<p>“we were able to take all those designs and spin up our own SMT, it&#x27;s called Surface Mount Technology”<p>“run that through our surface mount technology by our line operators”<p>“meaning the printed circuit board or PCBA assembly”<p>So, he’s definitely not an EE. No EE talks like this when they are trying to explain the nuts and bolts to a lay person. Either that or the editor took liberties they shouldn’t have.

Interesting. It is impressive that they almost managed to do 100% made in the USA, judging by the &quot;Table of Origin&quot;. However the table doesn&#x27;t really cover all the details down to the components, so I&#x27;m wondering where he sourced every small details.<p>He did include one paragraph on the website:<p>&quot;Individual components used in fabrication are sourced direct from chip makers and parts distributors.&quot;

&gt; It has 4 GB of memory, and reviewers say that its specs are pretty outdated.<p>In my imaginary world, I wish someone stood up to this type of insanity. This would be a good time to force Apple &#x2F; Google to revive old devices and allow the supply chains to adjust manufacturing things outside of China while the rest of the world pauses and lives with some outdated hardware technology. I know this is probably not feasible because Apple and Google probably survive on selling of new phones, but hey I can at least dream!

There are plenty of EEs in the good ol&#x27; US of A, they&#x27;re just working as software engineers at the moment out of necessity, since there aren&#x27;t really any EE jobs here, outside the defense sector and a few large companies.<p>But that is beside the point since it&#x27;s not &quot;EE&quot; that&#x27;s being done in China. It&#x27;s manufacturing and assembly of US designs. And that is where there&#x27;s real shortage - skilled labor that can do that. The actual work is mostly done by robots, but before it _is_ done by robots, manufacturing capacity needs to be designed and built. Under the best circumstances (e.g. unlimited Apple resources in India) this takes years.

I can&#x27;t believe people still buy the Purism scam after all these years...I ordered a Librem 5 and a Pinephone back in the days of the other supply chain story(Covid). The Pinephone flew in from China in less than 2 months; the Librem 5 took more than 4 years to arrive. All Purism offered during that time were &quot;opportunities&quot; to invest and exhausting delay stories about failing supply chains, while keeping their customers completely in the dark about their order state. Instead of preying on the goodwill of FOSS enthousiasts, they now try to tap into a new market (nationalism) to sell the same useless overpriced brick to.

&gt;We always were sort of maintaining two different bills of materials of Chinese componentry and Western componentry because they&#x27;re different. Then we produced five different iterations of the Librem 5 phone through Chinese contract manufacturing. And we iterated through those five changes over the course of about 18 months. At that point, we finally had a production ready product. And then we were able to take everything that we did and bring it to US soil.<p>How many iterations can they get done in US in 18 months? That&#x27;s what&#x27;s going to kill Made in USA, if you can&#x27;t get the design done on time, not a few $100 extra in PRC vs west sourced BOM, but millions more spent on development over longer time frame because lack of talent. Is the short&#x2F;medium term solution still to send &quot;homework&quot; to Chinese prototype teams? I suppose economics of PRC speed and few prototypes &gt; 100%+ tariffs.

&gt; ‘Let&#x27;s take an existing made-in-China product and then just produce the same thing in the US.’<p>This is what got me. I remember 40-50 years ago everything (or most) &quot;made in the USA&quot;. And how &quot;Chinese product&quot; was an insult while &quot;American product&quot; was a badge of honour. Oh how the turnstable..<p>When I was studying in the UK the _most_ diligent students were the Chinese ones. First to come, last to leave, spent hours and hours on workshops, but they were not interested in staying in the UK to live&#x2F;work there. As if they were on a mission. Go-Learn-Return-SpreadKnowledge. Many other nationalities were tempted by the mighty-GBP and stayed. But not the Chinese. Vast majority of them learned as much as they could and then went back home. That was mid-90s.<p>And those 20yo students of the mid-90s are 50yo with great studies and 30 years of experience, and there were thousands of them studying all over the UK, USA, and other countries. So there you have it..<p>I keep thinking of &quot;Principles for Dealing with the Changing World Order by Ray Dalio&quot; [0]. The game is almost over, time for the next cycle..<p>[0]: <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=xguam0TKMw8" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=xguam0TKMw8</a>

&gt;We sell a Chinese made Librem 5 phone for $799. We sell the Liberty phone for $2,000. When you&#x27;re looking at just those numbers alone, that looks like a giant leap in cost. But there&#x27;s a couple of factors that are not publicly known when you&#x27;re looking at just those prices. When you&#x27;re looking at COGS, cost of goods sold, our Librem 5 phone is equivalent in cost to about an iPhone. It&#x27;s about $500 and some odd dollars, $550. So we can see that the Librem 5 phone doesn&#x27;t have a very high margin when we sell it. The Liberty phone, same COGS componentry wise, but to produce it on US soil, we&#x27;re adding not quite a hundred dollars. So it&#x27;s about $650 to produce that entire phone.<p>So the phone that costs them $550 is sold for about $800, while the phone that costs them $650 is sold for $2000. I wonder why is such a big difference in the margins.

Something that caught my attention is how they started with Chinese design and engineering because that was where the knowledge was. They they learned and appropriated that knowledge to the point where this was not needed anymore.<p>I love this approach, as it’s not purely commercial, it’s focused on knowledge, and it’s not “stealing” tech, they probably have that on their contracts and the like.<p>Also, it’s EXACTLY what China set out to do a few decades ago, and foreign industrialists and capitalists were so eager to spend less, they flocked over there, and the Chinese now have the knowledge as well as the labor force do to what they do.<p>Some people love to cry about how China is “stealing” American tech, when in reality no one ever pointed a gun at a tech CEO’s head and said “you must move manufacturing to China.” They did it because it was profitable, and they knew the terms.<p>I’m not saying industrial espionage doesn’t happen in China, it does, as it does anywhere else. I just don’t like the rhetoric of saying they’re “bad” for doing a perfectly legal business tactic.

Was this written by GPT2? It makes zero sense to me. I&#x27;ve designed and shipped chips on u.s. soil.

&quot;manufacturing expertise exists primarily in China, Vietnam, Cambodia, and other countries&quot; lol. What&#x27;s this skill that Cambodians have that Americans can&#x27;t learn or can&#x27;t be automated by robots? Can they juggle 4 wrenches in the air simultaneously?

I had a Librem 15 and I will never buy another Purism product again.<p>I wish it was good, but the product broke in less than two years. Worse yet, when it broke Purism couldn&#x27;t help at all because they stopped making the 15s.<p>That will be a hard pass for me...

&quot;On those two products we take the printed circuit board, which is just a blank board that has no components&quot;<p>Don&#x27;t count on that. On Schneier&#x27;s blog years ago, we brainstormed attacks on hardware in subversion discussions. One idea was putting a hidden chip in the board itself. Another was modifying the board&#x27;s material to emanate secrets for RF attacks by a nearby attacker. There&#x27;s a reason high-security at NSA required TEMPEST shielding. I wonder who prints the circuit boards.<p>On the chip side, substituting one of them with the same covers would be an easy attack. One team showed a tiny change at analog level could have subversive effects with low odds of being spotted. I wonder how they verify they received the correct chips.<p>Just from a domestic, manufacturing angle, the story sounds great. I&#x27;m grateful the company made sacrifices to make smartphones in America. I hope their example leads to innovation that drives the prices further down.<p>&quot;we are doing the entire manufacturing process of all of the electronics, meaning resistors, capacitors, integrated circuits&quot;<p>I disagree with this take unless the integrated circuits are designed and fabbed in America and by Purism. They&#x27;re critical, high-value parts of the product that used to be piles of individual components before ASIC&#x27;s. If not made here, I&#x27;d say upfront it&#x27;s manufactured in USA &quot;except for (percentage or function of) integrated circuits in it.&quot;

&quot;[...] chip sets that are like ST Micro [a Swiss company with American factories]&quot;<p>I guess that if Ford moved their HQ in DRC, it would be called a Congolese company with American factories, too?

How much would it cost to create the equivalent of a first generation iPhone 8 with more storage space in America?<p>That phone had everything necessary for communication, navigation, and even some basic photography and entertainment.<p>Imagine a whole industry of distraction free dumb phones being built, by economic necessity right here in America, that then result in lower rates of addiction and better mental health.

Was just thinking about this the other day. Why were the librem and the pinephone never updated? I&#x27;d like to get a new one, but am sure not going to buy something 10+ years old at this point. (Would be happy if a new one was comparable to my old iPhone 6s.)<p>I know there&#x27;s not a lot of money in them. But if you want sales <i>at all</i> you better update your hardware more often than never.

$2000 is a punchline to a joke? No?? OK then, we&#x27;re back at the 1990s cost level, when cell phones were as big as a brick with 50% of it being a battery.<p><a href="https:&#x2F;&#x2F;www.ooma.com&#x2F;wp-content&#x2F;uploads&#x2F;cell-phone-cost-comparison-ooma-edited.jpg" rel="nofollow">https:&#x2F;&#x2F;www.ooma.com&#x2F;wp-content&#x2F;uploads&#x2F;cell-phone-cost-comp...</a>

ctrl+f &quot;moat&quot;<p>Hmm. So why can they have a 3x markup?<p>What is the moat? Who will overpay by $1,000?<p>1. People who are required to use a product with very specific certifications.<p>2. People who want to use a product with a desirable backstory.<p>In the first instance the US military requires testing and certifications that are costly to achieve, creating a moat for military suppliers.<p>In the second instance, some podcast listeners are willing to significantly overpay for generic supplements due to the backstory and their trust in that podcaster.<p>I am curious what the market breakdown is for this device - how many do they sell for case 1? how many do they sell for case 2?<p>Also, if they don&#x27;t sell very many, then their manufacturing capital costs, design and supply chain overheads per phone will be very high.

&gt;We can&#x27;t have some nefarious chip put into the supply chain from a hostile country.<p>On the other hand, China can think the same. Why rely on Qualcomm, Intel, Nvidia? Or why rely on any US based tech, including software and services?

This is kind of like the PCB pricing story, they <i>could</i> be priced competitively but that&#x27;s not how the market in the US for domestic PCB manufacturing has been setup. It&#x27;s been setup to target things that <i>must</i> be made here, where pricing is usually dictated by that demand rather than a competitive market rate.<p>If china were taken out of the picture (e.g. JLCPCB) ideally a competitor would attempt to take what was that market. Or not? Maybe the margins are low and this is why it hasn&#x27;t happened here already.

On iOS, if you go into Settings -&gt; General -&gt; Legal &amp; Regulatory , and scroll all the way down to the very bottom, you will see: &quot;Made in China&quot; :)

&gt; It&#x27;s going from raw materials to finished goods at our facility.<p>More lies from Mr. Weaver... I&#x27;m sorry but an imx5 SoC is not a raw material.

I don’t understand<p>I get that you can assemble a phone PCB with SMT parts yourself, that’s not that crazy<p>But is there actually an American made SoC that can be used for a phone?

Taiwan used to be just fishing villages, the idea that it could become a powerhouse chip manufacturer was just pure fantasy.

Cost is 650 and they sell it for 2k? lol<p>By the time the US learns what &quot;efficiency&quot; means, China will be building on Mars

A big company like Apple can literally just buy the expertise that is needed to move production anywhere that makes sense.<p>Flex likewise can do the same.<p>There will be some ramp up time but these companies operate as scale.

I wonder how much it costs to do the following -- let&#x27;s backtrack.<p>We already know that US companies can design phones, like Apple.<p>OK so the next step is to figure out where to source the components -- and under the context of OP&#x27;s article, that means which components can be sourced directly from the US, or from the EU (i.e. manufactured inside EU, not branded in EU but sourced elsewhere).<p>Once we can figure out which components are economically feasible to be manufactured in the US and EU with the tariff, we might be able to go from there and slowly expand the operation to the rest of the chain.

Companies will never pay an American worker what an American worker needs to survive or live. This is going nowhere because unlike China where street food is had for pennies, American street food is BK, McD&#x27;s and Taco Bell for $$$. Cost of living? Americans want homes, they don&#x27;t want to live with their families, they want cars not bikes. Manufacturing in America will take a century. IMO

That was an incredibly long interview for them to just say the COGS is only 100$ higher, but we feel the margin should be 1200.

Many of these articles make a great case for why these industries should have been protected domestically years ago.

Made in the USA makes no business sense for everything<p>Then again our POTUS is a self proclaimed genius

Purism also markups their mini PC by a lot. Bunch of scammers IMO. Source: <a href="https:&#x2F;&#x2F;www.alibaba.com&#x2F;product-detail&#x2F;New-Top-mini-pc-i7-10510U_62546345460.html" rel="nofollow">https:&#x2F;&#x2F;www.alibaba.com&#x2F;product-detail&#x2F;New-Top-mini-pc-i7-10...</a>

&quot;You could count the number of skilled electronics engineers on US soil, and there&#x27;s probably a million in Shenzhen alone.&quot;<p>Anyone else failing to semantically parse that sentence?

Oh man Purism, well I think Librem but yeah

America need more manufacturing and less service industry.

A year ago I would&#x27;ve been ready and willing to pay double price for a fully US-made phone. Purism&#x27;s liberty phone seemed interesting.<p>Now, I will not buy american products at any price. It feels totally ridiculous now to even talk about moving the supply chain to the US.