If Apple were to shift its production from India or China to the US, the price of an iPhone might rise to $3,000 from $1,000. In rupees, the price would go up from around Rs 85,000 to about Rs 2.5 lakh.
A day before, on May 16, US President Donald Trump addressed the Qatar capital, Doha, and said that he had told Apple CEO Tim Cook that there is no requirement for him to establish factories in India. They do not want Apple products produced there.
During a visit to Qatar, Trump discussed his conversation with Cook at a business function and topped the conversation in a humorous way.
Let us see in four points in which way the price of the iPhone will go up.
Evaluation of 'Labor Cost'
According to the Financial Express, Apple gives Indian assembly workers an average monthly salary of $290 (Rs 25,000). In the US it is tied to the minimum wage legislation and would be raised to $2,900 (Rs 2.5 lakh). It goes up an astonishing 13 times its present worth.
Inaugurated facilities: Apple's iPhone production brings tribal lands into focus
Apple's shifting iPhone production out of China would bring new opportunities to Navajos and Hopis.
The choice to stop doing business with Chinese firms necessitates new manufacturing capabilities. Apple has cited many legal issues with Chinese manufacturers for iPhone components and has been targeted with several lawsuits over product copyrights issued from China; these kinds of issues constitute one block to China's access to America.
Currently, many iPhone parts come from sources such as China and get shipped to India to be assembled. This approach reduces the logistics expense and cost due to the proximity. But if those parts were shipped to the US, it would be much more expensive.
India is also production-friendly, for example, with the Production Linked Incentive (PLI) scheme that is beneficial to companies such as Apple.
If the production shifts to the US, it is calculated that the price of assembling one iPhone would rise from 30 dollars to 390 dollars, around 33,000 rupees. This would lead to Apple's profit per unit dropping considerably from 450 dollars to 60 dollars. In other words, Apple would be compelled to drop their profit by 390 dollars, which would be coercing them to hike their prices, primarily in the US market.
Expanding the production of iPhones in the US would lead to an absurd increase in the manufacturing and logistic costs, estimated to raise the iPhone price by almost double, resulting in a massive decrease in Apple’s profit.