Siri, Apple’s “digital assistant," reflects the challenge of knowing exactly where the value of an iPhone comes from - even if it’s put together in China. The iPhone X has a manufacturing cost of about $400, an $800 wholesale cost, and a $1,200 retail unsubsidised cost, according to analysts. The iPhone’s contribution to US trade deficits is almost certain to have grown sharply alongside higher retail prices and shipments.īut the manufacturing value does not include the intellectual property value Apple adds through engineering and design work done in its headquarters in Cupertino, Calif., as well as margins taken by distributors.
Over the last decade, Apple shipped 373 million iPhones, worth $101 billion by manufacturing value, in the United States, according to researcher StrategyAnalytics. It said in January it planned to pay $55 billion to US suppliers this year. “That is an important reason why US-China trade friction will cause ‘collateral damage,’ especially in other Asian economies," he said, adding that in value added terms, the US trade deficit with China was only $239 billion last year, 36% lower than the headline number.įor its part, Apple has responded to Trump’s concerns with a pledge to bring some suppliers to the United States. Louis Kuijs, head of Asia economics research at Oxford Economics, notes that US companies’ using global supply chains to manufacture products in China means other economies would be caught in the crossfire of a trade war. “With an iPhone, where China is just the final assembler, most of the value (contributed by China) is just the labour rather than the components themselves," said John Wu, an economic analyst with a US-based think tank, the Information & Innovation Foundation. That’s also about 22% of the $70 billion in cell phones and household goods the US imported from China.
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Using a rough calculation, that implies the iPhone 7 series added $15.7 billion to the US trade deficit with China last year, about 4.4% of the total. The impact on export data of just the iPhone could be major.Īpple shipped 61 million iPhones to the United States last year, data from researchers Counterpoint and IHS Markit show, spending $258 on average to make each iPhone 7 and 7 Plus. Other suppliers from Taiwan, the United States and Europe also take their portion, while assembly, done by contract manufacturers in China like Foxconn, represents only an estimated 3 to 6% of the manufacturing cost.Ĭurrent trade statistics, however, count most of the manufacturing cost in China’s export numbers, which has prompted global bodies like the World Trade Organization (WTO) to consider alternative calculations that include where value is added. Another $44.45 goes to Japan’s Toshiba Corp and South Korea’s SK Hynix for memory chips. Of that, $110 goes to Samsung Electronics in South Korea for supplying displays.
IHS Markit estimates its components cost a total of $370.25.