Apple Shifts Production: All US iPhones to Be Manufactured in India
Apple is set to make a significant shift in its production strategy by moving the assembly of all iPhones sold in the United States to India by next year. This decision, reported by the Financial Times, comes in response to renewed tariff threats from former President Donald Trump regarding Chinese imports. The move aims to diversify Appleโs supply chain, which has been heavily reliant on China, and could see the company producing over 60 million iPhones annually in India by 2026, effectively doubling its current output.
Strategic Shift Amid Tariff Threats
The United States remains Appleโs most crucial market, accounting for approximately 28% of the companyโs global iPhone shipments in 2024, according to IDC. By relocating production away from China, Apple aims to avoid steep tariffs and mitigate long-term geopolitical risks associated with US-China relations. The decision is also a direct response to Trumpโs โreciprocal tariffโ agenda, which has previously imposed tariffs as high as 145% on Chinese imports, including a 20% duty on smartphones. Although some electronics were recently exempted from these tariffs, the relief appears temporary, with new levies on semiconductor-heavy products potentially affecting Appleโs entire product line.
In the fiscal year ending March 2025, Apple is expected to assemble $22 billion worth of iPhones in India, marking a 60% increase from the previous year. Currently, around 20% of the worldโs iPhones are produced in India, a figure that is anticipated to grow rapidly. Most of this production occurs at Foxconnโs extensive facility in Tamil Nadu, alongside Tata Electronics, which has taken over Wistronโs operations and now manages Pegatronโs production as well.
Government Support and Production Incentives
Indiaโs government, led by Prime Minister Narendra Modi, is actively supporting Appleโs transition by providing production-linked incentives and a new $2.7 billion subsidy plan aimed at enhancing electronics manufacturing and semiconductor production. This support is crucial as Apple seeks to establish a more resilient supply chain that is less dependent on China, which has dominated the companyโs manufacturing for nearly two decades.
The urgency behind Appleโs shift is underscored by a trade shock in early 2024, when Trumpโs tariffs resulted in a staggering $700 billion loss in the companyโs market value. In response, Apple began exporting iPhones assembled in India to the US, a strategic move designed to circumvent the impending tariff increases. However, challenges remain, as Apple still relies heavily on Chinese suppliers for various components. Experts estimate that completely relocating the supply chain could take several years, with Bloomberg Intelligence suggesting that moving just 10% of production out of China might require up to eight years.
Challenges and Future Outlook
While Appleโs transition to India represents a significant milestone, it does not entirely sever the companyโs ties with China. Analysts have noted that the US lacks the labor force and infrastructure necessary to support large-scale iPhone assembly, making India a more viable alternative. This shift also counters Trumpโs previous calls for companies to โbring jobs home,โ highlighting the complexities of global manufacturing dynamics.
As Apple prepares to report its earnings next week, analysts anticipate tough questions regarding the financial implications of tariffs, Indiaโs role in the companyโs long-term strategy, and the feasibility of its production goals for 2025. Despite the challenges, the message is clear: the future of iPhone production for the US market will increasingly be centered in India, reflecting a broader trend of supply chain reshuffling across the tech industry. The pandemic has exposed vulnerabilities in China-dependent manufacturing, and geopolitical risks continue to compound these concerns, prompting Apple to act swiftly to secure its supply chain and maintain its market position.
Observer Voice is the one stop site for National, International news, Sports, Editorโs Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
