Cupertino/New Delhi – Even as former U.S. President Donald Trump issued a warning to Apple, threatening to impose a 25% tariff on iPhones manufactured in India, the tech giant is pressing ahead with its expansion in the South Asian country. In a strategic pivot, Apple is increasingly positioning India as a central hub for iPhone production—despite rising geopolitical tensions and trade policy uncertainties.
Trump recently suggested that Apple should halt iPhone production in India or face heavy import duties in the United States. However, far from backing down, Apple is scaling up its investments in India. The reason? Manufacturing in India still makes strong financial sense for the company, regardless of potential tariffs.
India: More Than Just a China Alternative
Apple’s decision to ramp up operations in India is rooted in both cost efficiency and strategic diversification. India is not only offering attractive government incentives under Prime Minister Narendra Modi’s “Make in India” initiative, but it also provides easier access to critical manufacturing components and a growing skilled labor force.
Moreover, Apple has already committed substantial capital to building production infrastructure in India. Given these investments, relocating production elsewhere would be both costly and impractical. Industry analysts believe India isn’t just replacing China—it’s becoming Apple’s next major manufacturing base.
The Economics Behind iPhone Manufacturing
The cost breakdown of a $1,000 iPhone sheds light on Apple’s global supply chain strategy. Apple earns the lion’s share—around $450—through brand value, design, and software. Taiwan earns about $150 for producing processors, while South Korea takes home $90 for OLED screens and memory components. Japan contributes $85 through its camera modules, and American chipmakers like Qualcomm and Broadcom make approximately $80 per unit. Other countries such as Germany, Vietnam, and Malaysia collectively earn around $45.
India and China, where final assembly takes place, earn the least—just around $30 per iPhone. That means assembling countries receive less than 3% of the product’s total retail value. The real profit lies in design and innovation, not in physical assembly.
Why Apple Won’t Bring iPhone Assembly Back to the U.S.
Labor costs form a key part of this equation. In India, factory workers typically earn around $230 per month, while the average wage for similar roles in California can exceed $2,900 per month—over 13 times higher.
If Apple were to move iPhone assembly back to the U.S., the assembly cost alone would skyrocket from $30 to approximately $390 per unit. This figure excludes the cost of components and logistics.
Even with a potential 25% import tariff on India-made iPhones—raising the assembly cost from $30 to $37.50—manufacturing in India would still be roughly ten times cheaper than in the United States.
Profit Margins at Risk
Currently, Apple earns an estimated $450 in profit on each iPhone, thanks primarily to its software, branding, and design ecosystem. If it were forced to pay $390 just for assembly in the U.S., its profit per device would plummet to just $60—an 87% drop.
Faced with that kind of margin pressure, Apple is unlikely to shift its manufacturing base away from India. Instead, it appears set to deepen its ties with the Indian market, both as a manufacturing base and as an emerging consumer market.
