Even if the United States were to impose a 25% tariff on iPhones manufactured in India, the total production cost would still be much lower if compared with manufacturing the devices in the US, according to a report by Global Trade Research Initiative (GTRI).
This comes amid a statement by US President Donald Trump, threatening to impose 25% tariffs on iPhones if Apple decides to make it in India. However, the GTRI report showed that manufacturing in India remains cost-effective, despite such duties.
The report breaks down the current value chain of a $1,000 iPhone, which involves contributions from over a dozen countries. Apple retains the largest share of the value, about $450 per device, through its brand, software, and design.
It also added that the US component makers, such as Qualcomm and Broadcom, add $80, while Taiwan contributes $150 through chip manufacturing. South Korea adds $90 via OLED screens and memory chips, and Japan supplies components worth $85, mainly through camera systems. Germany, Vietnam, and Malaysia account for another $45 through smaller parts.
What Else?
GTRI stated that China and India, despite being major players in iPhone assembly, earn only around USD 30 per device. This is less than 3% of the total retail price of an iPhone. The report argues that manufacturing iPhones in India is still economically viable even if a 25% tariff is applied.
This is mainly because of the sharp difference in labour costs between India and the U.S. In India, assembly workers earn approximately $230 per month, while in the U.S. states like California, labour costs could soar to around $2,900 per month due to minimum wage laws, a 13-fold increase.
As a result, assembling an iPhone in India costs about $30, while the same process in the U.S. would cost around $390. In addition to this, Apple gets the benefit of production-linked incentive (PLI) on iPhone manufacturing in India from government.
If Apple were to shift production to the U.S., its profit per iPhone could fall drastically from $450 to just $60, unless retail prices are significantly increased. The GTRI report highlighted how global value chains and labour cost differences make India a competitive option for manufacturing, even in the face of potential U.S. trade restrictions.
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