After imposing Trump Many countries, most notably China, are subject to high tariffs. One option companies have resorted to to avoid these high tariffs is to shift manufacturing to countries with lower tariffs. For many global companies, this began a few years ago with the escalation of the US-China trade war, and Vietnam and Thailand have seen success in this sector. But what about the Middle East? Most Gulf countries, including Saudi Arabia and the UAE, only have 10% tariffs. In this article, we will take you on an interesting journey and explore whether Saudi Arabia and the UAE could become Apple's new manufacturing hubs, replacing China, Vietnam, Brazil, and India.
Saudi Arabia and the UAE
Everyone seeks Kingdom of Saudi Arabia The UAE and Saudi Arabia are working to diversify their economies away from oil and promote manufacturing, particularly in the advanced technology sector. The UAE launched the "Project 300 Billion" initiative in 2021, which aims to increase the local industrial sector's contribution to the national income to AED 300 billion (€72 billion). Saudi Arabia has Vision 2030, which similarly focuses on developing manufacturing and stimulating the industrial sector's contribution to the GDP.
Accordingly, there have been reports that some of the world's largest technology companies, including Dell and HP, are exploring locations for new factories in Saudi Arabia. Lenovo is building a computer and server assembly plant there. Saudi Arabia's state-funded $100 billion (€88 billion) Alat company is collaborating with Japan's SoftBank Group on industrial robots, which can later be used on assembly lines, helping to address the local labor shortage.
Moreover, Saudi Arabia is trying to establish itself as a safe haven for companies seeking to evade Trump's high tariffs. To this end, it is seeking to attract Foxconn, a major iPhone supplier, and Taiwanese company Quanta, which manufactures computers and components for companies like Dell.
iPhone made in Saudi Arabia
Would Apple consider manufacturing devices? IPhone Its own in Saudi Arabia or the UAE. In fact, it's still difficult at the moment. The current manufacturing sector is still underdeveloped and limited, largely confined to sectors adjacent to the hydrocarbon sector. If the Saudis want to compete in high-tech manufacturing, they will face countries like China, South Korea, Taiwan, Japan, Germany, and Switzerland. In lower-tech sectors, they compete with Malaysia, Indonesia, and Vietnam.
While these countries suffer from various disadvantages, they possess decades of experience, established infrastructure, a large domestic market, and human capital. These advantages are not present in the Gulf states. There are also a number of drawbacks, including growing cultural issues with the increasing number of foreigners working in previously conservative Gulf societies, and continuing geopolitical uncertainty regarding potential conflicts between Iran and the United States.
In addition to the risks associated with large-scale projects, while the region strives to bring about technological leadership, many of these initiatives fail to materialize. Megaprojects such as autonomous taxis and hyperloop travel have failed, as have investments in cryptocurrencies.
Conclusion
Ultimately, the idea of an iPhone made in Saudi Arabia or the UAE remains more of an aspiration and a futuristic vision than a tangible reality. Currently, China is the primary supplier for assembling the majority of Apple's phones, followed by India, whose share is gradually increasing. However, there are serious steps being taken by the governments of Saudi Arabia and the UAE, which may pave the way for the Middle East to become the ideal location for manufacturing advanced devices, and perhaps the iPhone, over the next few decades. But for now, the status quo remains.
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Even if that happens, Saudi Arabia and the UAE don't have the skilled workforce for this task! Do you think the workforce we're talking about here is construction workers? We're talking about highly skilled engineers with advanced experience, who handle spare parts by hand like Italian chefs handle pizza dough. And even if it does happen, the labor will be imported from India or China, and Saudi Arabia will become a mere facade! And don't ask me about quality in any Arab country where democracy and human rights are absent, and where the average income doesn't guarantee the dignity of the worker.
Relying on temporary economic conditions is neither a guide nor a strategy for achieving economic transformation. A knowledge-free economy amounts to mere real estate, companies, and thriving buildings, but it's certainly not industrial or manufacturing. Tim Cook said that China possesses a storehouse of precise expertise, not just cheap manufacturing. Neither robots nor ChatGPT are of any use to "new entrants." What's the solution? Building a knowledge economy from expertise and harnessing it industrially is no easy task. Analyzing the dynamics of modern industry to seize opportunities is just the beginning. Real opportunities, however, sometimes don't wait to find them; they create them. The past track record of manufacturing, such as electric cars, is not reassuring. Acquiring a Chinese company and bringing its robots to the region is another equally difficult option, but there's no harm in trying and stumbling, even if the road is long.
It may be a final assembly and not a complete manufacturing as a first step to overcome US customs duties.
Good talk, but the cost of labor is higher than India. As for the location and capabilities, the Emirates has advanced factories, as does Saudi Arabia. The Emirates and Saudi Arabia are also an ideal environment for worker happiness and lifestyle.
Saudi Arabia has an excellent reputation for quality manufacturing. In the UAE, Jebel Ali and its factories produce only shoddy goods.
God bless
No way.
The dream can come true
Localizing these advanced industries in our Arab and Islamic countries may put our feet, or rather our minds, on the right path, as China did, and as a result there has been a renaissance, or rather an industrial revolution, in these precise fields, and then catching up with this scientific and technological bandwagon, and then leadership and precedence... We hope for that, especially since many of our countries possess material and scientific components and superior minds (scientists).
From my point of view, any two countries can do this, whether it is the Kingdom of Saudi Arabia or the United Arab Emirates. It is a very easy thing. They just need me to tighten the screws and everything will be fine, God willing.
This is good news. The most important thing is the quality of workmanship.