Apple under fire

[PandaBear]

Originally Posted By: Tempest
Where does the share holder come into this?


Reduced sales and reduced profit, the equalibrium now shifted and that reflects in reduced sales volume as well as profit margin.

Quote:
Your logic is like saying workers don't pay taxes, the customers do, or share holder don't pay taxes, the workers do, etc etc.

"Say what?" Say income tax on salary would increase cost and therefore sales price and customer pay for these taxes. Say reduced profit due to increase in tax would reduce work force count and therefore reduced jobs or income for workers.

Quote:
If you look at the demand and supply curve intersection, and have taken any economic course, you'd know that any increase in cost or reduction in price would be felt by both the producer and the consumer.

"Of course, but what does that have to do with my post?" Because you forgot how the demand supply slope intersection works. Draw a cross with a line from upper left to lower right, and a line from lower left to upper right. Then when you shift one line, the intersection changes and the reduced or increased sales are reflected in prices. An increase in cost x volume is never 100% translated into increase in price x volume. This means the producer would eat some of the cost (depends on how steep the slope of supply and demand).

 

[Tempest]

Quote:
Reduced sales and reduced profit, the equalibrium now shifted and that reflects in reduced sales volume as well as profit margin.

Again, what does that have to do with stock holders?
Quote:
Say income tax on salary would increase cost and therefore sales price and customer pay for these taxes. Say reduced profit due to increase in tax would reduce work force count and therefore reduced jobs or income for workers.

Yes, but your response doesn't mention a thing about stock holders??
Quote:
Because you forgot how the demand supply slope intersection works. Draw a cross with a line from upper left to lower right, and a line from lower left to upper right. Then when you shift one line, the intersection changes and the reduced or increased sales are reflected in prices. An increase in cost x volume is never 100% translated into increase in price x volume. This means the producer would eat some of the cost (depends on how steep the slope of supply and demand).

What does that have to do with lower taxes = lower prices?

 

[PandaBear]

Originally Posted By: Tempest
Quote:
Reduced sales and reduced profit, the equalibrium now shifted and that reflects in reduced sales volume as well as profit margin.

Again, what does that have to do with stock holders?

reduced stock price to keep PE ratio in check
Quote:
Quote:
Say income tax on salary would increase cost and therefore sales price and customer pay for these taxes. Say reduced profit due to increase in tax would reduce work force count and therefore reduced jobs or income for workers.

Yes, but your response doesn't mention a thing about stock holders??

see above, reduced profit means reduced stock price to keep PE ratio in check

Quote:
What does that have to do with lower taxes = lower prices?


Lower taxes doesn't lower price by exact amount, and increase in tax doesn't increase the price the same amount. Usually the seller (usually split among retailer, manufacturer) and the buyer would split the increase / reduction in tax or other cost changes.

 

[MrHorspwer]

Originally Posted By: sleddriver
Originally Posted By: MrHorspwer
....The important stuff that requires precision to produce, like the silicone, is already made over here. With the except of maybe the glass, everything else is low-skill assembly work. No different than stitching up a set of shoes or putting together a TV set.

Your comment indicates you don't at all understand the complexities involved in manufacturing sub-micron IC's...at all.

BTW, it's SILICON.


No, I don't.

Then again, you don't need to know how a watch works to tell time.

Is that your price of admission to this thread? Understanding the complexities involved in manufacturing sub-micron IC's?

Please, enlighten me to the complexities involved in manufacturing sub-micron IC's and how these incredibly important details relate to my comment.

 

[Mystic]

Well, I am not an economist and I am not some sort of expert in business management. But assuming most of the Apple stockholders are in the USA Apple stock has done very well for a long time, rarely going down in value very much. And that means some people have made a lot of money. I have no idea how many stockholders Apple has and if most of them are in fact in the USA but those people have done well. And Apple itself has done very well-they are apparently now the most wealthy corporation in the world.

I don't have any problem with that. But I do like to see everybody pay their fair share in taxes. If they are found guilty of some sort of tax evasion maybe Apple will have to pay a lot in taxes or pay a fine.

 

[PandaBear]

Originally Posted By: Mystic
Yes, I guess I should have went into a little more detail, but some people here apparently were willing to side with Apple regardless of the details. I did mention that a lot of money was being sent through Irish banks. A lot of people simply took what Apple said as fact-that they have most of their sales overseas and stuff like that.

Obviously most Apple sales are in countries like the USA, England, France, Canada, and a few other counties. In fact something like half of all Apple Computers are used in the USA, Canada, and England. All of the people in Ireland are not walking around with iPhones, iPads and have Apple Computers at their homes.

It is likely the whole deal was just to evade taxes, although Apple may possibly have been successful is using loopholes in the tax laws.

So Apple gets richer and richer but they show little regard about investing in the USA. Now they are going to build a manufacturing plant in Texas but there may be additional reasons for that also. The Chinese government apparently has kind of become disillusioned with Apple in China. So Apple is probably starting to look for other places to assemble their computers. A good possibility might be in some South American countries where there is low cost labor available and governments are willing to ignore safety and working conditions.

Apple at one time was probably my favorite company. I used Apple Computers and Apple seemed like a shining light compared to some other corporations. My opinion of Apple has changed quite a great deal in just the past few years. Some here may be willing to reward Apple with being creative in finding ways to evade taxes. I tend to think how many jobs Apple could have created right in the USA. I also wonder how much Apple actually is willing to listen to its customer base. But Microsoft is becoming divorced from its customer base as well.


Not really trying to target or endorse Apple here, but let's get some of the information straight.

Apple isn't doing anything different from the market trends of all other companies selling similar products, by buying parts designed in developed world (because of the know how and manufacturing technology export limitation), and have them assembly in China, Vietnam, etc due to low assembly labor cost.

The reason they stay in China has to do with momentum, Taiwanese companies dominates the contract manufacturing of electronics there because they are the one doing it first in Taiwan, and China want to tap this expertise and influence their politics (remember they are still just in a cease fire in their decades long civil war).

Foxconn in particular is so big that no one else, including other Taiwanese competitors like ASUS / Pegatron, can compete, because they make so many components that they can do assembly with no profit to capture the small, low end component businesses (i.e. cables, stickers, card board boxes, etc). Other companies would go out of business trying to undercut Foxconn's cost. This is industrial common knowledge, everyone knows about this (I heard it from someone previously worked for LiteOn).

BTW, the manufacturing in the US return mainly has to do with inventory cost and just in time manufacturing. They are back so they can pay for the CPU / Ram / Hard Drive the second they slap it onto the computers, instead of slapping them on in China and pay for them while they are on ships that take 12 days to cross the Pacific. If the price dropped in this 12 days, whoever owns these expensive components have to eat that.

 

[PandaBear]

Originally Posted By: MrHorspwer
Originally Posted By: sleddriver
Originally Posted By: MrHorspwer
....The important stuff that requires precision to produce, like the silicone, is already made over here. With the except of maybe the glass, everything else is low-skill assembly work. No different than stitching up a set of shoes or putting together a TV set.

Your comment indicates you don't at all understand the complexities involved in manufacturing sub-micron IC's...at all.

BTW, it's SILICON.


No, I don't.

Then again, you don't need to know how a watch works to tell time.

Is that your price of admission to this thread? Understanding the complexities involved in manufacturing sub-micron IC's?

Please, enlighten me to the complexities involved in manufacturing sub-micron IC's and how these incredibly important details relate to my comment.


The silicon dies are not made in China, there're export ban on critical technologies that must be used (i.e. 70nm and below) to make these chips, and they are now made in US (Intel, Micron, Samsung), Korea (Samsung, Hynix), Taiwan (TSMC and UMC), Singapore (Global Foundry). The whole wafers are sent to China, Costa Rica, Philippine, Malaysia, etc to be diced and put into epoxy packages with ball grids or lead frames and then called "Made in China, Costa Rica, Philippine, Malaysia, etc".

So, most of the money (i.e. 50% profit margin) is still made by the R&D part of the chip design based in developed world, then the foundry made most of them with high fixed cost (i.e. $10B to build a fab and that's 80% of the remaining 50% of retail price), and the packaging / testing gets the bread crumbs (i.e. 20% of the production cost), yet they are the country of origin.

Most of that $10B in foundry are equipments that are made in Japan (Nikon, Canon, Panasonic, etc), US (Applied Material, KLA Tencor, Lams Research, etc), Europe (ASML, etc), etc.

 

[MrHorspwer]

Quote:
The silicon dies are not made in China, there're export ban on critical technologies that must be used (i.e. 70nm and below) to make these chips, and they are now made in US (Intel, Micron, Samsung), Korea (Samsung, Hynix), Taiwan (TSMC and UMC), Singapore (Global Foundry). The whole wafers are sent to China, Costa Rica, Philippine, Malaysia, etc to be diced and put into epoxy packages with ball grids or lead frames and then called "Made in China, Costa Rica, Philippine, Malaysia, etc".

So, most of the money (i.e. 50% profit margin) is still made by the R&D part of the chip design based in developed world, then the foundry made most of them with high fixed cost (i.e. $10B to build a fab and that's 80% of the remaining 50% of retail price), and the packaging / testing gets the bread crumbs (i.e. 20% of the production cost), yet they are the country of origin.


Which is what my original claim was.

It's not as if Apple draws some pictures, says "This is what we want!", and sends it off to China for wholesale engineering, development, and manufacturing.

There are still plenty of development and manufacturing dollars being spent stateside. While Apple may not own any fabs or foundries themselves, the majority of fabs they send work to are in the US, correct?

So, I still stand by my statement that many of the "good" jobs, the ones that require intelligence and precision to perform, are already being supported by Apple. That leaves the "bread crumbs", as you so eloquently put it, being performed in China.

 

[Mystic]

Yes, the Apple Computers are designed in the USA and important components are still manufactured in the USA but that is not the point-the point is that Apple had huge sums of money overseas in Irish banks and elsewhere. Everybody knows the computers are typically designed in the USA and some of the electronic components are still made in the USA but the assembly often takes place in China. That does not explain in any way the money in Ireland and elsewhere.

And Apple is not the only one doing it either. And somebody needs to explain why GE does not seem to be taxed at all, or at least like other USA corporations.

 

[PandaBear]

Originally Posted By: Mystic
Yes, the Apple Computers are designed in the USA and important components are still manufactured in the USA but that is not the point-the point is that Apple had huge sums of money overseas in Irish banks and elsewhere. Everybody knows the computers are typically designed in the USA and some of the electronic components are still made in the USA but the assembly often takes place in China. That does not explain in any way the money in Ireland and elsewhere.

And Apple is not the only one doing it either. And somebody needs to explain why GE does not seem to be taxed at all, or at least like other USA corporations.


I've been saying that for years, tax shelters that allows you to price the US portion of the transaction as break even or losing money is dragging down US tax base more than anything, and Ireland / Bermuda / Cayman Island have nothing to do with these companies' success, at all.

 

[Mystic]

Exactly-obviously everybody in Ireland is not walking around with an iPhone/iPod/I/Pad and using a Mac Computer at their home. So it is just a tax dodge probably. So the loopholes need to be closed. If the loopholes were closed maybe there would be more investment in the USA. Probably much worse than Apple is GE. Does GE pay any taxes?

The cyber criminals put their money in these offshore banks also. Just recently a bank in Costa Rico was closed-the criminals had funneled BILLIONS of dollars through that bank. That is billions with a 'B.'

Probably the ultimate way to shut down most cyber criminals is to follow the money trail and shut down the banks that are laundering the money. If no money is being made there is little incentive. But there are probably pay offs to fat cat politicians also to keep the banks open and dealing.

 

[sleddriver]

Originally Posted By: MrHorspwer

No, I don't.

Then again, you don't need to know how a watch works to tell time.

Is that your price of admission to this thread? Understanding the complexities involved in manufacturing sub-micron IC's?

Please, enlighten me to the complexities involved in manufacturing sub-micron IC's and how these incredibly important details relate to my comment.

You're the one who jumped in to comment MrHorspwer, claiming it's as simple as "stitching up shoes or a TV set".

No, it's not.

As to 'the complexities involved...', you wouldn't understand. Your original post and reply indicate this. You don't understand the difference between silicon and IC's. The former has to be grown in extremely pure form before the production of the later can even begin.

Also read up on Mark Twain: "It's better to keep one's mouth shut and be thought a fool than to open it and remove all doubt."

 

[MrHorspwer]

Originally Posted By: sleddriver
Originally Posted By: MrHorspwer

No, I don't.

Then again, you don't need to know how a watch works to tell time.

Is that your price of admission to this thread? Understanding the complexities involved in manufacturing sub-micron IC's?

Please, enlighten me to the complexities involved in manufacturing sub-micron IC's and how these incredibly important details relate to my comment.

You're the one who jumped in to comment MrHorspwer, claiming it's as simple as "stitching up shoes or a TV set".

No, it's not.

As to 'the complexities involved...', you wouldn't understand. Your original post and reply indicate this. You don't understand the difference between silicon and IC's. The former has to be grown in extremely pure form before the production of the later can even begin.

Also read up on Mark Twain: "It's better to keep one's mouth shut and be thought a fool than to open it and remove all doubt."


For someone who is so well versed in Mark Twain and "the complexities involved in manufacturing sub-micron IC's", you sure are lacking in reading comprehension.

What I said was that assembling iPhones is a low-skill job. Hence, why it is performed in a massive assembly plant in China by uneducated workers in near-3rd world conditions. These jobs and the skills involved are not unlike many of the other assembly jobs performed by unskilled laborers in China. Jobs like making shoes, televisions, radios, etc.

This has nothing to do with the folks in a clean room at a multi-billion dollar fab in Texas. I made no implications that these jobs were simple or low-skill. Quite the opposite in fact. I referred to them as "important" and requiring "precision" to perform.

BTW, thanks for sharing the always insightful: "The opposite of PROgress is CONgress" Did you just recently get that chain email and thought it was clever or were you saving it up for just the right thread?

Between this and the awesome Mark Twain quote, I bet you spend a lot of time gleaning wit from emails with "fwd" somewhere in the subject line.

 

[sleddriver]

Originally Posted By: MrHorspwer
Originally Posted By: sleddriver
Originally Posted By: MrHorspwer

No, I don't.

Then again, you don't need to know how a watch works to tell time.

Is that your price of admission to this thread? Understanding the complexities involved in manufacturing sub-micron IC's?

Please, enlighten me to the complexities involved in manufacturing sub-micron IC's and how these incredibly important details relate to my comment.

You're the one who jumped in to comment MrHorspwer, claiming it's as simple as "stitching up shoes or a TV set".

No, it's not.

As to 'the complexities involved...', you wouldn't understand. Your original post and reply indicate this. You don't understand the difference between silicon and IC's. The former has to be grown in extremely pure form before the production of the later can even begin.

Also read up on Mark Twain: "It's better to keep one's mouth shut and be thought a fool than to open it and remove all doubt."


For someone who is so well versed in Mark Twain and "the complexities involved in manufacturing sub-micron IC's", you sure are lacking in reading comprehension.

What I said was that assembling iPhones is a low-skill job. Hence, why it is performed in a massive assembly plant in China by uneducated workers in near-3rd world conditions. These jobs and the skills involved are not unlike many of the other assembly jobs performed by unskilled laborers in China. Jobs like making shoes, televisions, radios, etc.

This has nothing to do with the folks in a clean room at a multi-billion dollar fab in Texas. I made no implications that these jobs were simple or low-skill. Quite the opposite in fact. I referred to them as "important" and requiring "precision" to perform.

BTW, thanks for sharing the always insightful: "The opposite of PROgress is CONgress" Did you just recently get that chain email and thought it was clever or were you saving it up for just the right thread?

Between this and the awesome Mark Twain quote, I bet you spend a lot of time gleaning wit from emails with "fwd" somewhere in the subject line.


You do like being argumentative, don't you? You strayed into an area way out of your knowledge and now you're touchy at being called out on it. Not to mention confusing siliCONE for siliCON.

Attacking me just proves my point and your own ignorance. Panda attempted to explain to you that uncut wafers are sent offshore to be assembled, packaged and tested. He has more patience than I.

Lastly, you equate the skill required to assemble an iPhone or other high-quality electronic device on equal with those 'making shoes, televisions, radios, etc.'

Still not even close.

Assembling iPhones is not a low skill job, comparable to making shoes. Period.

 

[rshaw125]

This is not tax evasion. They pay lower taxes in Ireland. US corporate tax rates are way too higher.

 

[Mystic]

And why does Apple have so much of its money in Irish banks? So they can pay those lower taxes? Exactly how many Apple products are being sold in Ireland? Does every home in Ireland have a Mac Pro?

 

[PandaBear]

Originally Posted By: rshaw125
They pay lower taxes in Ireland. US corporate tax rates are way too higher.


So if Bermuda, who has nothing to do with any businesses in the US or China, offer a 0.00005% tax rate, that would make every other country's tax rate to be "too high"?

How about if Cayman Island offer 0.0000000005% tax rate? would that make Bermuda's 0.00005% too high all of a sudden?

The point is, it is bad politics and bad loop hole. If it is between 2 large economies mutually allowing each others' income to be not double taxed, that's fine. However I do not see how having a middleman that has nothing to do (like Ireland) with the normal business would add value. Unless they physically ship the products to that country first, unload it and load it back on a boat, I do not see how it should be allowed.

 

[Mystic]

Pure and simple it has to be a tax dodge. They are probably not selling a huge number of Apple products there. Sure there are some Apple products sold there. But not compared to the USA or Canada or England. And I don't think there are large Apple factories there building the products. A lot of Apple products are built in China.

And Apple is probably not the only corporation doing this. I keep hearing stories that GE, with its political connections and everything, is either paying very little tax or no tax at all. And yet it is politically correct to attack Exxon/Mobil but not GE or Apple.

With all of these tax loophole issues and all of the recent problems with the IRS I think the USA needs massive tax reform. Maybe some sort of flat tax and get rid of the IRS.

 

[SteveSRT8]

Boy, I've heard it all here!

The reason Apple does not pay enough taxes here is because THEY ARE ALLOWED TO.

Our system is open to the big corps to lobby Congress and get the desired legislation implemented.

Congressmen come cheap!

 

[Mystic]

Well, that is true also. Sure some of the politicians are available for a price. I don't know exactly what is going on with GE but every year they seem to pay very little in taxes. And these loopholes in the tax laws need to be closed. But maybe the tax laws are too complex anyway.

If you look at the recent issues with the IRS it should be obvious there is a need for major changes in that agency.

Even the criminals are taking advantage of these foreign banks and various slimy deals. With all the billions these cyber criminals are making they have to put all of that money somewhere and have access to it. The best way to stop cyber crime would be to probably shut down the top ten or so corrupt banks that are laundering the money. Always follow the money trail. No big money being made-probably big reduction in cyber crime because people would not be making big bucks off of it. There was one such bust recently. But probably big shot politicians are making big bucks so the criminals can keep on operating.

You want to find out what is going on? Always follow the money trail.