Adding Up the iPhone

How an American invention makes money for the world

By Michael Schuman Monday, May 16, 2011

    • Apple's long-awaited white iPhone 4, which hit stores April 28, is expected to be another smash for Steve Jobs. But how much will it benefit the American economy? Though invented in the U.S., the iPhone is manufactured in China, so, ironically, iPhones sold in the U.S. add to the trade deficit with the Middle Kingdom. Yet China contributes almost nothing to the value of an iPhone; it does little more than assemble parts from elsewhere. A host of other countries, including the U.S., benefit more from producing the world's hottest gadget.

    WHERE THE PARTS FOR A $500 IPHONE ARE MADE

    $61

    JAPAN

    It doesn't innovate as much as the U.S., but its tech prowess means a lot of high-end manufacturing value stays there

    $7

    CHINA

    Often more of an assembly line for other nation's wares, work here accounts for only 3.6% of an iPhone's production cost

    $48

    UNSPECIFIED

    $11

    U.S.

    While America doesn't make much of what goes into the iPhone, it's always better to innovate than to fabricate; just see Apple's profit

    $30

    GERMANY

    $23

    SOUTH KOREA

    iPhone retail price $500

    Parts and assembly -$179

    Apple's profit

    $321

    Figures are rounded.

    Source: Asian Development Bank Institute, 2009 stats