The U.S. consumer electronics supply chain is a vast network that connects manufacturers, suppliers, retailers, and consumers. This complex system ensures that products like smartphones, laptops, televisions, and others reach consumers efficiently. The U.S. consumer electronics supply chain has evolved due to technological advancements, globalization, and increasing consumer demands.
Each consumer electronics product comprises several hundred different parts. The parts include a Central Processing Unit (CPU), Memory Chip, Battery, Screen, Camera, Sensors, Circuit Board, and many more. Managing the raw material or manufacturing of such a large variety of parts requires a multifaced supply chain network. This process encompasses the entire cycle from sourcing raw material or procurement of parts to the final delivery of consumer electronics and spare parts to consumers.
The U.S. consumer electronics supply chain has the following key components: designing and producing individual components, sourcing and procuring parts, assembling complete electronics products, and overseeing post-production logistics and spare parts management.
Tiers in the U.S. Consumer Electronics Supply Chain:
Like other industries, there are three major tiers of consumer electronics supply chain.
Tier 1:
This tier includes major original equipment manufacturers (OEMs) and brands that produce the original products. Well-known consumer electronics OEMs in the USA are Apple, Samsung, Dell, HP, Nvidia, Intel, and more.
Tier 2:
This tier includes a list of suppliers that provide essential components such as CPU chips, semiconductors, displays, batteries to original equipment manufacturers (OEMs). Tier-2 suppliers have a direct business relation with OEMs.
Tier 3:
This tier of suppliers provides basic raw materials and necessary components to Tier 2 suppliers. Raw materials include silicon, cobalt, and rare earth metals like lithium and indium. This tier does not have any direct relation with OEMs, but their contribution to the whole manufacturing sector plays an important role.
Supply Chain of Major Consumer Electronics Products in the USA:
According to statistics given by Oberlo, the most used electronics products in the USA are smartphones, laptops or desktop computers, tablets, gaming consoles, televisions, and others. However, all these products are not fully manufactured in the United States. Their components, manufacturing, and assembly involve a whole globalized network of supply chains. Here is the supply chain breakdown of some major U.S. consumer electronics products.
Smartphones:
The latest 2024 data by Oberlo states that cell phones are the most popular consumer electronics products in the United States. Around 97.6% of U.S consumers own a smartphone, with an increase of 1.2% compared to 2023. Apple, Samsung, and Google are the top three smartphone brands in the USA.
Apple sells around a quarter billion iPhones each year while winning half of the smartphone market share in the USA. The iPhone’s components follow a complete globalized supply chain network. The report on Where is the iPhone made outlines that iPhone’s displays are made either by LG or Samsung in South Korea. Similarly, flash memory and DRAM come from Kioxia’s company in Japan. The gorilla glass that protects the display is U.S manufactured from a Corning factory. Meanwhile, the main brain of Apple’s iPhone, the A18 Pro chip, is designed in California, USA, but manufactured by Taiwanese semiconductor company TSMC.
Apple also relies on other smaller companies and suppliers like Broadcom and Texas Instruments in Southeast Asia for the manufacturing of components like USB microcontrollers, power management ICs, and wireless chipsets.
After sourcing all the components and raw materials, the company comes to the assembly of the iPhones. The largest manufacturer of Apple iPhones is Foxconn in China. Other than China, Apple is getting a lot of iPhones manufactured in Vietnam and India, with around 11 factories in manufacturing in Vietnam products.
Like Apple, the other highest selling smartphone brand in the USA, Samsung also has its supply chain footprints all over the world. Surprisingly, Samsung has no manufacturing facilities in China; however, it has six big factories in Vietnam. These factories produce around half of the globally manufactured Samsung smartphones and other wearables devices. Other than Vietnam, Samsung manufactures its smartphones in India, South Korea, Brazil, and Indonesia.
Computers and Laptops:
Oberlo report on the most popular devices in the U.S ranks laptops second after smartphones. It says that two in three people in the U.S own a laptop or a desktop computer. The top laptop brands in the U.S are Apple, Dell, and HP.
As per Forbes, before COVID-19, Apple was highly reliant on China for the manufacturing of its MacBooks. Due to the production shutdown in COVID-19, Apple planned to diversify its production of MacBooks in different regions of the world. Apple now has manufacturing units in India and Vietnam as well. These countries offer young, stable, and well-educated labor, making them an attractive alternative to China for Apple MacBooks manufacturing.
Other than Apple, major laptop brands like Dell and HP also have a globalized network of suppliers and manufacturers. Dells has two manufacturing units, one in North Carolina and one in Massachusetts. Dells also has some direct suppliers like Mircron, Intel, and Broadcom in the United States. In addition to the USA, Dells manufactures its laptops in other countries like China, Vietnam, India, Malaysia, Mexico, and Poland.
MSN reports about Hewlett Packard (HP) and says that HP is the highest-selling computer company worldwide, capturing 20% of the computer market in 2023. HP has manufacturing plants in the U.S., China, India, Thailand, Vietnam, and Mexico. Other than that, the hardware used in HP computers comes from other countries like Malaysia and the Philippines.
More Consumer Electronics Products:
Other consumer electronics include gaming consoles, televisions, smart watches, EarPods, and wristbands. Like smartphones and laptops, these consumer electronics products have a worldwide supply chain. Most of the products are manufactured in China, Vietnam, and India. NikkeiAsia reports that Apple started manufacturing its AirPods in Vietnam in March 2020. Similarly, Samsung manufactures its EarPods and other accessories in China, Vietnam, India, and South Korea.
Challenges in the Consumer Electronics Supply Chain:
While a globally diversified supply chain of consumer electronics provides easy access to raw materials and cost-effective manufacturing, it also creates lengthy lead times and high vulnerabilities to external disruptions such as natural disasters, geopolitical tensions, and shortage of materials. One of the survey reports says that 69% of the distributors experience an average of three to six weeks’ delay in deliveries. Here are several challenges that impact the efficiency and timely delivery of consumer electronics.
Natural Disaster & Pandemics:
The supply chain of consumer electronics is highly vulnerable to natural disasters and pandemics. The COVID-19 pandemic and associated circumstances had marked impacts on U.S. imports of cellular phones. According to report by U.S. International Trade Commission, the import of cellphones in USA decreased by $6.4 billion (11.6%) from 2019 to 2020. This was the peak time of COVID-19 when factories in China, and rest of the world stopped working and production of cellphones.
Geopolitical Conflicts & Semiconductor Shortages:
The consumers’ demand for electronics products is increasing with each coming day. This high demand further creates a demand for chips, semiconductors, and metals, required to develop CPU and other components in consumer electronics devices. Geopolitical conflicts significantly impact semiconductor supply for consumer electronics by disrupting production and trade. Forbes reports that U.S. trade restrictions on China in 2020 limited chip imports, while the Russian invasion of Ukraine caused a shortage of neon, a crucial gas for chip manufacturing. Such conflicts lead to supply chain disruptions, increased production costs, and delays in manufacturing essential devices like smartphones and computers. As tensions escalate, global chip production remains vulnerable, affecting both availability and pricing of consumer electronics.
Sustainability and Circularity in the U.S. Consumer Electronics Supply Chain:
Like other industries, sustainability is a growing priority in the consumer electronics sector. Companies are trying to adopt circular economic principles to reduce waste, carbon emissions, and promote recycling initiatives. The U.S. consumer electronics industry is making significant strides toward sustainability through the Consumer Technology Circularity Initiative (CTCI). Launched at CES 2024, this initiative brings together industry leaders like Lenovo, LG Electronics, Panasonic, Samsung, and Sony Electronics to reduce waste and enhance recycling efforts. By focusing on a circular economy, companies are innovating in product design, material reuse, and climate impact reduction. For example, Lenovo has integrated closed-loop recycled plastics into nearly 300 products, while LG is expanding the use of recycled plastics across 19 product categories.
Beyond recycling, companies are adopting new business models to extend product life and minimize waste. Panasonic is pioneering modular product design and subscription-based models, while Samsung is applying recycled resin to plastic parts, aiming for 50% by 2030. Sony, under its “Road to Zero” plan, is eliminating plastic packaging in small products and increasing the use of recycled plastics. With over 5 billion pounds of electronics recycled in the U.S. since 2011, CTCI is a major step toward a sustainable, circular consumer electronics supply chain.
Conclusion:
The U.S. consumer electronics supply chain is a complex network of suppliers, manufacturers, retailers, and consumers. It is undergoing significant transformations due to evolving challenges and technological advancements. Companies must address supply chain vulnerabilities to ensure resilience and efficiency. Also, as industry grows, embracing digital solutions, circular economic initiatives, and sustainable strategies will be key to a better sustainable future.
Have any questions or want to know more about challenges and transformations in the U.S. consumer electronics supply chain? Please reach out to the COBE Ethics Chair at COBEEthics@boisestate.edu. Explore the College of Business and Economics (COBE) website to learn more about undergraduate and graduate degree programs in economics and supply chain management.