Made-in-India iPhones will be cheaper in US despite Trump's tariffs
What's the story
Even if a 25% tariff is imposed on iPhones made in India, the total cost of production would still be much lower than what it would be if the devices were produced in the US.
This has been revealed in a report from Global Trade Research Initiative (GTRI).
The GTRI report also noted that manufacturing costs in India still remain economically viable despite such tariffs.
Value chain analysis
Breakdown of iPhone's $1,000 value chain
The GTRI report gives a detailed breakdown of the existing value chain of a $1,000 iPhone.
Apple keeps roughly $450 per device with its brand, software, and design.
US component manufacturers such as Qualcomm and Broadcom add another $80 while Taiwan contributes another $150 through chip manufacturing.
Other contributors include South Korea ($90), Japan ($85), Germany, Vietnam, and Malaysia ($45).
Earnings breakdown
China and India earn only about $30 per device
Despite being key players in iPhone assembly, China and India only earn about $30 per device. This amounts to less than 3% of the retail price of an iPhone.
The report argues that manufacturing iPhones in India still makes economic sense even with a possible 25% tariff, primarily due to the significantly lower labor costs compared to the US.
Cost comparison
Labor costs play a crucial role
The GTRI report emphasizes the stark difference in labor costs between India and the US as a major factor.
Assembly workers in India make roughly $230 per month, whereas those in California could make up to around $2,900 per month due to minimum wage laws.
This difference makes assembling an iPhone cost about $30 in India versus around $390 in the US.
Profit impact
Apple's profit per iPhone could drop drastically
If Apple were to move production to the US, its profit per iPhone could drop from $450 to merely $60 unless retail prices are drastically raised.
The GTRI report highlights how global value chains and labor cost differences make India a viable option for manufacturing, even amid possible US trade restrictions.