US President Donald Trump on Friday announced that the US plans to impose a 25% tariff on iPhones sold in the country if they are manufactured in India or anywhere else in the world. Now, a new report from the Global Trade Research Initiative (GTRI) has emerged, stating that even if the US were to implement such a tariff, the cost of manufacturing iPhones in India would still be much lower compared to if the devices were made in the US.
President Trump had also revealed earlier this month at the Doha Summit that he had asked Apple CEO Tim Cook to halt the iPhone assembly expansion plans, saying, “I don’t want you building in India… They can take care of themselves.”
Why Apple may not shift iPhone production to the US
The GTRI report highlights that assembly workers in India earn approximately $230 per month, and when compared to US states like California, these costs could go as high as $2,900, marking a 13-fold rise in expenses.
While the iPhone assembly in India costs around $30 to Apple, the same process in the US would cost the tech giant $390. Moreover, Apple also gets additional benefits from the Indian government via the Production Linked Incentive (PLI) scheme.
If Apple shifts its iPhone assembly to the US, its profit per iPhone would drop from $450 per unit to just $60, or it will be forced to increase retail prices significantly to absorb the added costs.
How much money does India earn from iPhone assembly?
A $1,000 iPhone has contributions from over a dozen countries, where Apple takes the lion’s share of the profit at $450, while its US component makers like Qualcomm and Broadcom get around $80. Meanwhile, Taiwan gets around $150 for chip manufacturing, and South Korea earns about $90 for OLED screens and memory chips. Japan contributes with camera lenses that cost about $85. Other countries in the value chain like Germany, Vietnam and Malaysia earn only about $45.
What about India and China? Both countries earn about $30 per unit they assemble, accounting for less than 3% of the iPhone’s retail value. Due to iPhone assembly, India generates about 60,000 jobs, while China generates around 300,000.
