Consumer Technology Association warns full US
Completely reshoring the manufacturing of consumer electronics like smartphones and laptops to the United States could drive up prices by a substantial 55 percent. This stark warning comes from a new industry report published yesterday, on October 6, by the Consumer Technology Association (CTA) and consulting firm Kearney.
The report, titled “Building a Resilient U.S. Consumer Technology Supply Chain: Costs, Constrains and the Path to Production,” highlights the significant financial burden this full localization would place on both consumers and businesses. It also suggests a more “practical” alternative: moving only final assembly processes to the U.S., though this would still entail higher costs than current global supply chains.
The Staggering Cost of Full Reshoring According to the Technology Association
The central finding of the CTA and Kearney report is clear: manufacturing consumer technology entirely within U.S. borders would escalate retail prices by more than half. This would profoundly impact the affordability of popular devices, ranging from advanced smartphones to essential personal computers.
Such a dramatic price increase stems from various factors inherent to domestic production. These include higher labor rates, more stringent environmental regulations, and the current absence of a fully established, integrated local supply chain infrastructure.
Businesses would grapple with significantly boosted operational expenditures, potentially stifling innovation and market competitiveness within the sector. This cost pressure could make domestically produced tech less appealing globally.
The report’s recommendation for shifting only final assembly to the U.S. acknowledges these economic realities. While still more expensive than offshore alternatives, this strategy aims to balance the desire for domestic production with the need to mitigate extreme cost increases for consumers.
A Historical Perspective on Global Supply Chains
For decades, U.S. manufacturing, particularly in the electronics sector, steadily migrated overseas. Companies sought lower labor costs and leveraged well-developed international supplier networks, which created robust foreign manufacturing ecosystems.
This offshoring contributed to a sharp decline in the U.S. manufacturing sector’s share of the nonfarm workforce. The U.S. share of global semiconductor manufacturing capacity, for example, fell from nearly 40 percent in 1990 to just 12 percent by 2022.
Drivers Behind the Reshoring Push
Recent years have seen a powerful resurgence of interest in reshoring. The COVID-19 pandemic vividly exposed the fragility of extended global supply chains, creating critical shortages, especially for semiconductors.
Geopolitical tensions and trade disputes have only reinforced the urgency of localized production for many governments and corporations. Ensuring a stable supply of critical components has become a strategic imperative.
Beyond resilience, reshoring promises substantial economic benefits. It offers the potential to create new jobs, stimulate domestic investment, and help in balancing trade deficits. National security also plays a crucial role, with governments prioritizing domestic control over critical technological components.
Government Backing for Domestic Production
The U.S. government has actively encouraged domestic manufacturing through a series of significant legislative actions and initiatives. The CHIPS and Science Act of 2022, enacted on August 9, 2022, stands as a cornerstone of this effort.
This bipartisan legislation allocates approximately $280 billion, including over $52 billion in federal aid, to revitalize domestic semiconductor manufacturing and bolster research and workforce development. It provides $39 billion in grants for chip manufacturers and a 25 percent tax credit for U.S. facilities involved in producing semiconductors or chipmaking equipment.
By August 2024, the CHIPS Act had already catalyzed an estimated $450 billion in private investments across 90 projects. These initiatives are designed to generate approximately 58,000 new jobs, significantly boosting the domestic economy.
Significant Hurdles to Domestic Production
Despite strong political will and considerable investment, the path to widespread domestic manufacturing is fraught with challenges. The primary obstacle remains the higher cost associated with producing goods in the U.S. compared to established overseas hubs.
These elevated costs are driven by a confluence of factors, including higher wages, increased tooling expenses, and a less dense network of specialized suppliers. For example, producing commodity consumer IoT devices in the U.S. can incur costs 40 to 100 percent higher than in Asia.
Manufacturers also frequently cite policy uncertainty as a major impediment to long-term investment and planning. A clear and consistent regulatory framework is crucial for companies to commit to large-scale domestic operations.
Workforce Shortages and Market Realities
A critical shortage of skilled workers and technicians also presents a substantial hurdle. The timeline required to hire and adequately train a qualified workforce for advanced manufacturing is compressing rapidly, further complicating reshoring efforts.
Moreover, the anticipated “reshoring boom” has not materialized uniformly across all sectors. U.S. manufacturing construction spending actually declined by 21 percent since June 2024, indicating a broader slowdown.
This decline was largely due to a 44 percent slowdown in spending on electronics factories and semiconductor fabs from their mid-2024 peak. Such trends suggest that the ambitious goals for domestic production face considerable headwinds.
The Kearney Reshoring Index, which tracks changes in the U.S. manufacturing import ratio, remained in negative territory in 2026. Despite a slight improvement from -115 to -86, this indicates continued reliance on imports over domestic production for many goods.
AI’s Impact and Future Supply Chain Dynamics
The burgeoning AI boom is significantly impacting the cost and availability of critical components like memory chips. This increased demand is fundamentally reshaping global technology supply chains.
J.P. Morgan Global Research estimated that DRAM prices would surge by over 400 percent between early 2024 and the end of 2026. Data centers are forecast to consume around 70 percent of global memory chip output in 2026, diverting capacity from consumer devices and driving up prices for electronics.
This dynamic has already led to price increases for consumer electronics, with some manufacturers adjusting their pricing. Such pressures necessitate that companies evaluate hybrid approaches, focusing reshoring efforts on regulated or IP-sensitive products, while considering nearshoring and friendshoring for other components.