They have their entire production in Taiwan, which probably feels like a good move right now. If they did final assembly in the US, US tariffs would be better, but selling outside the US would mean importing parts into the US and exporting computers outside, paying tradewar-level tariffs both ways. The way they are set up now they get hit harder on US imports but the rest of their customers aren't affected at all.
>but selling outside the US would mean importing parts into the US and exporting computers outside, paying tradewar-level tariffs both ways
exactly. This is why it doesn't make much sense to setup a US shop as it will be for US market only. The product produced in a US shop would still cost even for domestic market at least like "imported plus tariff" and with no ability to export it. There is a reason Russian cars are complete crap and aren't exported. That reason is called tariffs.
The US doesn't have sufficient supply of manufacturing skills to do this. Maybe Framework could, but there isn't capacity for most manufacturing of products to move to US assembly. You also can't underestimate the difficulty of that training, it's not just training the workers doing the final assembly, it's the entire org chart being built around manufacturing. China and Taiwan (for consumer electronics) have decades of recent experience in doing this and have highly optimised processes, the US has never had these skills at the volume that Asia does currently, and the last time it was remotely close was decades ago.
If the US decided that the 20-year priority was to be great at manufacturing then sure, it could probably get back to being world-class at this, but there's a reason why countries typically progress out of being manufacturing economies into being service economies – it's just a worse business to be in.
I see you getting downvoted which seems a bit harsh given it seemed like a very honest question. As far as I understand, a huge amount of materials and intermediate steps and companies are over in Taiwan or Shenzen or other places in Mainland China. Even if you could do some parts in the US (like final production) all the sub-components and companies who can actually produce them are dotted over Asia. This is part of the problem in raw economic terms: there is a large vendor and/or geographic lock-in. It's hard to get manufacturing jobs and work back in the US because most of these lines if production are somewhere else and moving one or even a few parts can't overwhelm the huge cost of moving stuff over the ocean potentially multiple times. I read that a brake manufacturer was particularly screwed even within North America because steel came from Canada, partial assembly would occur in Mexico and in the US, and then the finished product might cross a border yet again. Without tariffs this wasn't so bad, but if all the products have to cross a ton of borders a lot of these supply chains are in deep trouble.
> Wouldn’t it make sense then to spin up a separate final assembly within the US?
Like it can just be done?
> Or do their sales not warrant that kind of investment?
It's not so simple. That's the equivalent of other countries thinking they can just spin up a "silicon valley" outside the US. Sales or not it doesn't work like that.
For tarrifs, that seems equivalent to selling the final assembly at cost to a US sales subsidiary? Or would a final laptop have lower tarrifs than its parts?
They're halting the low tier laptops, so it's probably where they don't have enough margin to keep a competitive price.
I really hope this won’t affect International/European pricing for their laptops as I was planning on getting my GF (who lives in Poland) a Framework 12.
Additionally, I was thinking about purchasing a Framework Desktop to use as a server for my business. (I’d like to use LLMs but due to the sensitive nature of my customer’s data I would strongly prefer doing so locally.) I guess I’d have to send it to my GF and then smuggle it into the US in my carry on.
We're headquartered in the US, but have manufacturing in Taiwan. You are correct that there is no change in tariffs or pricing for our EU (and other non-US) customers.
If building hardware products wasn't hard enough. This could kill a lot of companies pretty quickly. If you have massive inventory in China or you've invested in a factory to build things at scale and now your US margins are underwater, I'm not sure what you do.
Nintendo is facing the same thing. Nintendo had tried to avoid Trump's first term tariffs in 2019 by spending a ton of money moving Switch production to Vietnam only for Vietnam to get hit massive 46% tariffs this week:
Add to that, consumers were already price sensitive on Nintendo, they've never been a "good value" situation.
They already raised the price quite a lot for the Switch 2 (compared to the first console) and people were already complaining about the prices BEFORE you had to slap an extra $200 per console and $20 per game for a "Americans didn't pay attention to 6th grade" tax.
This is really going to hurt the console market, like, in general.
Every company should present their prices with the tariff separately
Widget Pro 2: $1000 + Republican Tariff $460
Oh and don't personify Trump in these tariffs, always refer to them as the "Republican Administration Tariffs" so the rank and file senators can't hide behind "but it was Trump".
I lack references for it. But to the best of my knowledge it is not just US tariffs on the PRC that is driving the migration of manufacturing for Japanese companies away from the PRC over the last decade or so, but also the increasingly tense relations between Japan, ROC, and South Korea and the PRC. It should be emphasised that it is of course gradual given the massive investments made by Japanese companies over many decades, but it is noticeable as a Japanese consumer.
> But to the best of my knowledge it is not just US tariffs on the PRC that is driving the migration of manufacturing for Japanese companies away from the PRC over the last decade or so
Cost has increased as China itself domestically has matured (both as a consumer and the manufacturing side).
Nintendo clearly should have moved production the the USA and fully automated it. Thereby paying no tariffs and employing no americans except cleaning or repair staff.
> If you have massive inventory in China or you've invested in a factory to build things at scale and now your US margins are underwater, I'm not sure what you do.
Don’t have massive production in China if you want to sell in the US. The writing has been on the wall for this for almost 20 years. Even Obama was talking about it in 2007-08.
They had an assembly centre in Taiwan (or Thailand), it could have been easier shipping to many Asian markets they don't e.g. Singapore which has a affluent techy consumer base or Thailand/Malaysia etc.
They might be considering it. They may be playing the same cards Nintendo is where they are waiting out on whether the tarriffs are called off somehow before taking the option of a price hike.
Readit News
exactly. This is why it doesn't make much sense to setup a US shop as it will be for US market only. The product produced in a US shop would still cost even for domestic market at least like "imported plus tariff" and with no ability to export it. There is a reason Russian cars are complete crap and aren't exported. That reason is called tariffs.
1. Parts would still have to be imported. So each part will have tariffs added.
2. Some parts are sourced from China and would therefore face even higher tariffs.
3. Spinning up a final assembly in the US is expensive.
Given the current instability and chaos, starting a multi year project of spinning up a final assembly in the US is a risky move.
What if the tariffs are gone in 4 years? Now you have an expensive final assembly in the US that can't compete with the one in Taiwan anymore.
If the US decided that the 20-year priority was to be great at manufacturing then sure, it could probably get back to being world-class at this, but there's a reason why countries typically progress out of being manufacturing economies into being service economies – it's just a worse business to be in.
Like it can just be done?
> Or do their sales not warrant that kind of investment?
It's not so simple. That's the equivalent of other countries thinking they can just spin up a "silicon valley" outside the US. Sales or not it doesn't work like that.
They're halting the low tier laptops, so it's probably where they don't have enough margin to keep a competitive price.
This fractured landscape isn't better - same message on x:
https://news.ycombinator.com/item?id=43616389 (10 points)
Additionally, I was thinking about purchasing a Framework Desktop to use as a server for my business. (I’d like to use LLMs but due to the sensitive nature of my customer’s data I would strongly prefer doing so locally.) I guess I’d have to send it to my GF and then smuggle it into the US in my carry on.
Nintendo is facing the same thing. Nintendo had tried to avoid Trump's first term tariffs in 2019 by spending a ton of money moving Switch production to Vietnam only for Vietnam to get hit massive 46% tariffs this week:
https://www.designdevelopmenttoday.com/industries/manufactur...
Increase price and pass cost of tariffs down to consumer
Add to that, consumers were already price sensitive on Nintendo, they've never been a "good value" situation.
They already raised the price quite a lot for the Switch 2 (compared to the first console) and people were already complaining about the prices BEFORE you had to slap an extra $200 per console and $20 per game for a "Americans didn't pay attention to 6th grade" tax.
This is really going to hurt the console market, like, in general.
Widget Pro 2: $1000 + Republican Tariff $460
Oh and don't personify Trump in these tariffs, always refer to them as the "Republican Administration Tariffs" so the rank and file senators can't hide behind "but it was Trump".
They are enabling this crap.
Cost has increased as China itself domestically has matured (both as a consumer and the manufacturing side).
Even China itself has moved some to e.g. Vietnam.
Don’t have massive production in China if you want to sell in the US. The writing has been on the wall for this for almost 20 years. Even Obama was talking about it in 2007-08.
How does this help? Everyone has already tried shifting to Vietnam, India, etc only to be hit by tariffs anyway.
I wonder what is worse with the current USA administration? The policy itself (e.g. blanket tariffs) or unpredictability of their actions.
Will tariffs for country X in a week will be higher or lower? Will they be paused/cancelled? Nobody knows - even Trump and his cronnies don’t know.
Should I build a factory within USA, which will take 2 years to build and 10years to reach profitability in this political uncertainty?
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