The Global Trade Research Initiative said on Saturday that even if the US imposesd a 25% tariff on iPhones manufactured in India, production costs would still be significantly lower than making the devices in the United States.The GTRIs’ comments came in the wake of US President Donald Trump’s recent statement threatening to impose a 25% tariff on iPhones if Apple chose to produce them in India.Despite this threat, the GTRI report demonstrated that Indian manufacturing remained a financially viable option for Apple, ANI reported.
Why are iPhones so expensive?
Breaking down the value chain of a $1,000 iPhone, the report highlighted the global nature of its production, involving parts and expertise from more than a dozen countries. Apple itself claims the largest portion of the value, around $450 per device, through its brand, software, and design.US component manufacturers, including Qualcomm and Broadcom, contribute approximately $80, while Taiwan adds $150 through chip manufacturing. South Korea supplies around $90 via OLED screens and memory chips, and Japan provides $85, mainly through camera components. Germany, Vietnam, and Malaysia contribute a further $45 through smaller parts.The report said that even though India is a major assembly hub, it receives just about $30 per device, amounting less than 3% of the retail price.
Why is India a favourable spot for Apple?
The report attributed the cost advantage of Indian manufacturing mainly to the massive difference in labour costs. Assembly workers in India earn roughly $230 per month, compared to around $2,900 in states like California, where minimum wage laws drive labour expenses up by nearly 13 times.This gap means that assembling an iPhone in India costs about $30, whereas the same process in the US would cost around $390. Furthermore, Apple benefits from government production-linked incentives (PLI) on iPhone manufacturing in India, further enhancing the financial appeal.GTRI warned that moving production to the US could see Apple’s profit per device tumble from $450 to just $60, unless it significantly hiked retail prices.The GTRI report highlighted that global value chains and lower labour costs gave India a strong edge as a manufacturing hub, even if the US introduced new trade restrictions.
