U.S. President Donald Trump has expressed that "iPhones sold in the U.S. should be made in the U.S.," deepening Apple's concerns as the company has been transferring its iPhone production bases from China to India. Apple is in a position where it must consider the transfer of its iPhone production base to the U.S. from three perspectives: ①price increases for iPhones due to rising labor costs ②fears of production delays due to the ban on U.S. exports of Chinese components ③decreased product yield due to a shortage of skilled labor.
According to foreign media reports including AFP on the 15th (local time), President Trump, while touring the Middle East, held a press conference in Qatar and stated, "It is undesirable for Apple to plan to produce iPhones sold in the U.S. in India. iPhones sold in the U.S. should be made in the U.S." Apple CEO Tim Cook noted earlier this month during an earnings announcement that "most iPhones sold in the U.S. will be produced in India starting from June."
Apple has been pushing to transfer its iPhone assembly lines and parts supply chains to India due to rising production costs in China amid the U.S.-China trade war and tariff effects. Last year, 2 out of 10 iPhones were produced in India. On the 12th, the Indian government approved a plan to establish a joint semiconductor plant between Apple’s iPhone production partner Foxconn and the Indian HCL Group. Financial Times reported that Apple plans to source more than 60 million iPhones sold in the U.S. exclusively from India by the end of next year.
Although President Trump is pressuring Apple to produce iPhones in the U.S., Apple finds itself in a difficult situation. The main reason for hesitating the transfer of its production base to the U.S. is the potential increase in iPhone prices. Producing products in the U.S. instead of cheaper labor markets like China or India would lead to higher labor costs, making an increase in the selling price of iPhones in the U.S. unavoidable. Securities analyst Wurmg Mohan from Bank of America stated, "Even if only the final assembly of the iPhone 16 Pro Max is transferred to the U.S., costs could increase by 25% due to high labor costs. Just considering that a 25% rise in labor costs, the iPhone 16 Pro price, currently at $1,199, would need to be $1,500."
Above all, the increase in iPhone sales prices in the U.S. could trigger a simultaneous rise in iPhone prices in the global market, undermining product competitiveness. This is because Apple sets global iPhone prices uniformly based on U.S. selling prices. An IT industry source explained, "Apple has maintained a strategy of freezing iPhone prices for the past three years. If the selling price of iPhones in the U.S. rises, price increases in other countries are inevitable. Otherwise, there could be a surge in iPhone purchases from cheaper countries."
Another reason Apple is concerned about the transfer of its production base to the U.S. is the reliance on a parts supply chain concentrated in China and the shortage of skilled manufacturing labor. Most of the parts supply chain is based in China, so if the U.S.-China conflict deepens and China bans the export of components to the U.S., production of iPhones could be disrupted. There are also concerns that high tariffs imposed on Chinese components coming into the U.S. could exacerbate the issue of rising iPhone prices.
Securing labor is also an issue. To build a factory in the U.S. and improve product yield, it would be necessary to bring engineers from the Chinese iPhone factories to set up the lines and improve the entire process with skilled workers. However, it is not easy to bring them to the U.S. due to the possibility of the Chinese government refusing to issue visas for them. An electronics industry source stated, "Apple has moved some assembly lines to India, but has not been able to bring many skilled workers from the Chinese factories to India. As a result, I understand that product yields are not even reaching 50%. Even if Apple tries to deploy skilled Chinese workers to the U.S., there is a high likelihood that the Chinese government will intervene and it will fall through."