Why Apple Is Hiring More Engineers in China

AppleAAPL +0.29%’s move to transfer some production back to the U.S. has been in the headlines, but that doesn’t mean the iPhone maker is scaling down its China operations.  In fact, it’s still expanding.

The Wall Street Journal reported Monday that Apple is poaching engineers from rival smartphone maker HTC and other Taiwanese tech firms, to build up its teams in Shanghai and Taipei.

The move is a reminder of the realities of globalization and the current limitations of factory automation. Industry executives and analysts agree that costs for robotic arms have to come down quite a bit before it would be cost-efficient to switch en masse to automated assembly lines for devices like smartphones and tablets. Until that happens, building an iPhone remains a labor-heavy process that is likely to stay in countries with cheaper labor such as China.

“Automation has its limitations,” said Arthur Hsieh, lead analyst for UBS Asia technology hardware. “A product has to have a long life cycle to be suitable. And if demand is very volatile, then manual production makes more sense.”

Apple’s Mac Pro computers were a prime candidate for automation, with their long life cycles and relatively stable demand, which meant the same production line could be used for a long time without requiring an overhaul. The company brought some Mac Pro production lines back to the U.S. this year following political pressure to reduce reliance on China-based contract manufacturers who have come under fire for labor practices.

But the bulk of Apple’s products can’t be adapted to automated assembly lines quite so easily. All of Apple’s iPhones and iPads are still assembled in China, and are not likely to move out in the near-term, analysts say.

Which brings us to engineers. Apple’s close cooperation with suppliers to develop new products means that it is wedded to its supply chain in China. It needs engineers and managers on the ground to continuously monitor developments at its component suppliers and manufacturers. And as it plans a wider array of products, it needs more engineers in China than ever before and has been aggressively trying to hire them in Shanghai and Taipei.

That’s why manufacturing jobs aren’t the only ones that may be difficult to move back to the U.S.