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The Global Trade Research Initiative stated on Saturday that even if the US were to impose a 25% tariff on iPhones produced in India, the production costs would still be considerably lower than manufacturing the devices in the United States.
The comments from GTRI followed US President Donald Trump’s recent warning about imposing a 25% tariff on iPhones if Apple decided to manufacture them in India.
Despite this warning, the GTRI report indicated that Indian manufacturing continues to be a financially viable option for Apple, as reported by ANI.
By analyzing the value chain of a $1,000 iPhone, the report emphasized the global aspect of its production, which involves components and expertise from over a dozen countries. Apple claims the largest share of the value, approximately $450 per device, attributed to its brand, software, and design.
US component manufacturers, such as Qualcomm and Broadcom, contribute around $80, while Taiwan adds $150 through chip production. South Korea provides about $90 through OLED screens and memory chips, and Japan contributes $85, primarily from camera components. Additionally, Germany, Vietnam, and Malaysia add another $45 through smaller parts.
The report noted that while India serves as a significant assembly hub, it only receives about $30 per device, which is less than 3% of the retail price.
What makes India an attractive location for Apple?
The report pointed out that the cost advantage of manufacturing in India is largely due to the substantial difference in labor costs. Assembly workers in India earn approximately $230 per month, in contrast to around $2,900 in states like California, where minimum wage laws inflate labor costs by nearly 13 times.
This disparity means that assembling an iPhone in India costs about $30, while the same process in the US would amount to around $390. Moreover, Apple benefits from government production-linked incentives (PLI) for iPhone manufacturing in India, which further enhances its financial attractiveness.
GTRI cautioned that relocating production to the US could result in a significant drop in Apple’s profit per device, decreasing from $450 to a much lower figure.
(Newsroom staff only edited this story for style from a syndicated feed)
