Apple Inc. is reportedly planning to relocate the assembly of all iPhones destined for the U.S. market from China to India by the end of 2026. This strategic move aims to mitigate the impact of escalating tariffs and geopolitical tensions between the United States and China.
Strategic Shift in Manufacturing
Currently, Apple manufactures the majority of its iPhones in China through partners like Foxconn and Pegatron. However, the company has been gradually increasing its production capacity in India since 2017, initially focusing on lower-cost models and expanding to flagship models by 2023. In 2024, approximately 40–43 million iPhones were produced in India, with around 30 million exported.
To meet the anticipated demand of 80–85 million units for the U.S. and Indian markets, Apple plans to double its production capacity in India. Key manufacturing partners, including Tata Electronics—which recently acquired a majority stake in Pegatron’s Indian operations—and Foxconn, are leading this expansion.
Tariff Pressures and Trade War Dynamics
The decision to shift production is largely influenced by the ongoing U.S.-China trade war. The U.S. government has imposed tariffs of up to 145% on Chinese goods, although smartphones have been temporarily exempted. India, in contrast, faces a 26% tariff, currently on hold pending bilateral trade negotiations.
Apple has already begun exporting iPhones from India to the U.S. to mitigate the impact of these tariffs. In March, the company shipped nearly $2 billion worth of handsets to the U.S., even chartering cargo flights to ensure sufficient inventory.
Challenges in the Transition
While the shift to India offers strategic advantages, it also presents challenges. India’s manufacturing infrastructure, though improving, still lags behind China’s in terms of efficiency and scale. Former Apple personnel have cited issues such as lower yield rates and a lack of urgency in Indian factories.
Additionally, critical components like semiconductor chipsets are still sourced from Taiwan’s TSMC. Achieving full independence from Chinese manufacturing remains a long-term goal, particularly for high-value components.
Implications for the Global Supply Chain
Apple’s move to shift iPhone production to India reflects a broader trend of companies seeking to diversify their supply chains amid geopolitical uncertainties. While India presents its own set of challenges, including regulatory hurdles and infrastructure limitations, it offers a viable alternative to China, especially in light of the current trade dynamics.
The success of this transition will depend on India’s ability to scale up its manufacturing capabilities and address existing inefficiencies. If successful, it could position India as a significant player in the global electronics manufacturing sector.
