Will Apple Stick With ‘Make in India’ iPhones Despite US Tariffs?
Could Trump’s Tariffs Impact Apple’s ‘Make in India’ Strategy?
Apple’s decision to manufacture iPhones in India has been a strategic move, but recent threats from US President Donald Trump could throw a wrench into those plans. Trump has suggested imposing a 25% tariff on iPhones made in India, aiming to protect American jobs. However, a new report from the Global Trade Research Initiative (GTRI) suggests that even with this tariff, producing iPhones in India would still be significantly cheaper than manufacturing them in the US.
Breaking Down the iPhone’s Global Value Chain
The GTRI report delves into the complex world of iPhone production, highlighting its truly global nature. Parts and expertise come from over a dozen countries, with Apple itself claiming the largest share of the value—around $450 per device—thanks to its brand, software, and design. US companies like Qualcomm and Broadcom contribute around $80, while Taiwan and South Korea play key roles in chip manufacturing and screen production. Even smaller countries like Germany, Vietnam, and Malaysia contribute to the final product.
Interestingly, despite being a major assembly hub, India receives only about $30 per device, less than 3% of the retail price. This disparity stems mainly from the significant difference in labor costs. Assembly workers in India earn around $230 per month, compared to nearly $2,900 in states like California. This means assembling an iPhone in India costs about $30, while the same process in the US would cost around $390.
India’s Manufacturing Advantage
The GTRI report emphasizes that lower labor costs and government production-linked incentives (PLI) make India a highly attractive manufacturing location for Apple. The report warns that moving production back to the US could significantly reduce Apple’s profit per device, potentially from $450 to just $60, unless the company significantly increases retail prices.
Ultimately, the report suggests that global value chains and lower labor costs give India a significant edge as a manufacturing hub, even in the face of potential US trade restrictions.
