In an interview yesterday with NBC’s Brian Williams, Apple (NASDAQ: AAPL) CEO Tim Cook announced that one of the existing Mac lines will be manufactured solely in the United States next year. While it likely will not make a dent on the nation’s eight percent unemployment, it is welcome news. Apple won’t need to rely on a huge labor force because the merchandise line is diminutive and because this type of manufacturing relies much more on advanced robotics. What is hopeful is the fact that Apple’s investment in America will generate need for a more home-based supply chain, which will, in all likelihood, create a ripple effect. This bodes well for Apple’s suppliers and partners in the U.S., some of which are emerging growth companies.
One of these companies is a very nice small-cap tech holding, TriQuint Semiconductor (NASDAQ: TQNT). The Hillsboro, Oregon-based company, with a market cap of around $823 million, provides radio frequency technology for communications, defense, and aerospace companies globally. It manufactures the little parts that manage power and other important processes in Apple’s mobile devices. Another supplier, Multi-Fineline Electronix (NASDAQ: MFLX) has a market cap of $423 million and engages in the design and manufacture of bendable printed circuit boards and related component assemblies for the electronics industry. TTM Technologies (NASDAQ: TTMI), which is an emerging growth supplier of printed circuit boards (PCBs). PCBs are the spine of many electronic devices. The specialized machinery of a gadget is attached to the PCB, which then controls the communication between them. Peregrine Semiconductor (NASDAQ: PSMI), with a market cap of $533 million, designs and sells radio frequency integrated circuits (RFICs) based on UltraCMOS technology.
There are sound business reasons why the United States is becoming progressively more appealing as a manufacturing site. It’s getting pricey for companies to create goods in China. The rising price of energy is making a huge impact. It’s becoming more expensive to power Chinese factories. In addition, the cost of shipping the finished goods to the U.S. has a tendency to eat away at the benefit of a low-cost labor force. Chinese salaries are also rising, which reduces the advantage further.
Investors looking for a little more leverage in reference to Apple’s never-ending ascendancy should consider buying the minor businesses that supply Apple with the parts that go into all those millions of mobile gadgets that the company produces. They are well positioned to benefit from a Mac line produced and assembled entirely in the United States.