Global supply chains: Who actually makes the iPod?
(Hal Varian, UC Berkeley)

Apple outsources the manufacture of the iPod device to several different Asian companies. To get the big picture of the whole global supply chain behind the iPod, you have to look at all the companies involved from those making simple parts or complicated components like hard drives right up to final assembly:

"...let us look at the production process as a sequence of steps... At each step, inputs like computer chips and a bare circuit board are converted into outputs like an assembled circuit board. The difference between the cost of the inputs and the value of the outputs is the “value added” at that step, which can then be attributed to the country where that value was added....

"...The profit margin on generic parts like nuts and bolts is very low, since these items are produced in intensely competitive industries and can be manufactured anywhere. Hence, they add little to the final value of the iPod. More specialized parts, like the hard drives and controller chips, have much higher value added....

"...The researchers estimated that $163 of the iPod’s $299 retail value ... was captured by American companies and workers, breaking it down to $75 for distribution and retail costs, $80 to Apple, and $8 to various domestic component makers. Japan contributed about $26 to the value added (mostly via the Toshiba disk drive), while Korea contributed less than $1...

"...The real value of the iPod doesn’t lie in its parts or even in putting those parts together. The bulk of the iPod’s value is in the conception and design of the iPod. That is why Apple gets $80 for each of these video iPods it sells, which is by far the largest piece of value added in the entire supply chain." (Source: Economist's View quoting from the New York Times)

Read the full report from UC Irvine's School of Business. There is a complete diagram of a generic electronics supply chain on page three of the report.