Hyderabad: 

US President Donald Trump wants Apple to start assembling iPhones in the United States instead of making them overseas. Trump has threatened the iPhone maker with 25 per cent import tariffs even if they make the devices in India. However, experts believe the "Made in America' iPhone plan could be nothing more than a fantasy as it is nearly impossible for Apple to shift the assembly line to the US. In addition to a substantial increase in production cost, the lack of a fully integrated supply chain in the country is another strong reason for Apple to keep sticking to its guns.

Due to Apple's supply chain being Asia-heavy around China, India, and Vietnam, it is not only impractical but also infeasible for Apple to relocate its manufacturing ecosystem to the USA in the near to mid-term, said Neil Shah, Vice President of Research at Market research and analysis firm Counterpoint Research.

Talking to CNN, Dan Ives, global head of technology research at Wedbush Securities, said that the idea of fully domestic iPhone production is a "fictional tale" and such a device could cost a whopping $3,500 (around Rs 2,98 lakh). According to the expert, it would take Apple at least three years and a massive expenditure of $30 billion just to shift 10 per cent of its supply chain to the US. Replicating Apple’s complex Asian supply chain in the US would result in massive cost increases, Ives warned.

"It's not just about Foxconn opening a factory in the USA, but also the supply chain has to relocate closer to the USA, which is beyond question. Secondly, even if Apple's partner starts assembling in the USA, it will be at least 10-20 per cent more expensive. So it would eventually be as expensive as the 25 per cent tariff," he said.

The cost of assembling an iPhone in India

An analysis by Global Trade Research Initiative (GTRI) estimates that Apple spends the least amount of money on assembly, while the majority of expenses go towards parts like chips, screens, and cameras, with the tech giant itself claiming the lion's share through its software, design, and brand.

As per the report, for a $1,000 iPhone, Apple keeps $450 and spends $80 on US component makers like Qualcomm and Broadcom. Taiwan earns $150 for chip manufacturing, South Korea adds $90 for OLED screens and memory chips, and Japan adds another $85, mainly via camera systems. Other countries like Germany, Vietnam, and Malaysia account for a modest $45 through smaller parts, while India gets only $30 for assembly, of which a large part is paid back through the production-linked incentive (PLI) scheme.

"In India, assembly workers make roughly $230 per month. In contrast, US minimum wage laws in states like California mean monthly labour costs could rise to $2,900 -- a 13-fold increase. The cost of assembling each iPhone would jump from $30 to about $390. Apple's profit per device would drop from $450 to around $60, unless offset by price hikes," GTRI Founder Ajay Srivastava said.

Shah said if not China, then India remains the only potential manufacturing destination for Apple as the ecosystem is mushrooming, aided by lower-cost English-speaking skilled labour, world-class software talent, favourable government policies such as PLI and a huge domestic consumption market.

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