Even if the United States decides to impose a 25% tax on iPhones made in India, it would still be cheaper to produce them there than in the U.S., according to a report by the Global Trade Research Initiative (GTRI). This news comes after President Donald Trump threatened that such a tax would apply if Apple chooses to manufacture its iPhones in India. The report explains how the cost of making an iPhone, which typically sells for around $1,000, is influenced by various countries involved in its production.
iPhone price breakdown
Apple earns the largest portion of the money from each phone due to its brand, software, and design. The report mentions other countries contribute to the iPhone's production: U.S. companies like Qualcomm and Broadcom provide parts worth about $80, while Taiwan contributes a certain amount from chip making. South Korea adds about $90 for screens and memory chips, Japan gives around $85 mainly for camera components, and other countries contribute smaller amounts.
Interestingly, even though China and India play key roles in putting iPhones together, they only receive about $30 per phone, which is less than 3% of the total selling price.
How ‘Made in India’ iPhone will be cheaper even after 25% tax
The report argues that making iPhones in India would still make financial sense, even with the potential tax. This is primarily due to the big difference in labor costs. In India, workers who assemble iPhones typically earn about a small fraction of what U.S. workers make. In California, for example, workers' salaries can reach around $2,900 a month, which is about 13 times higher than what workers in India earn.
Assembling an iPhone in India costs about $30, while doing the same in the U.S. would be significantly more expensive. Additionally, Apple benefits from a government program that encourages production in India.
If Apple were to move its production back to the U.S., its profit from each iPhone could drop sharply from the current figures to only about $60, unless they raise retail prices considerably. The GTRI report highlights how the differences in global production costs make India a strong contender for iPhone manufacturing, even with potential trade challenges from the U.S.
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Inputs from ANI
