Apple is shifting its iPhone assembly from China to India, aiming to diversify its supply chain and reduce reliance on the US market. The tech giant plans to source over 60 million iPhones sold in the US annually by 2026 from Indian manufacturers.
The manufacturing process behind iPhones involves over 1,000 components sourced from all over the world, but they are largely assembled in China. However, with the ongoing trade tensions and Donald Trump’s aggressive tariff policies, tech giant Apple is reportedly planning to switch assembly of all iPhones for the US market to India as soon as next year.
Apple has been one of the biggest stock market casualties due to the prospect of its Chinese-made products being hit with hefty import taxes when they reach the US. However, a White House decision to exclude smartphones from the heaviest Chinese tariffs softened the blow. Nevertheless, Apple is still exposed to a 20% levy on all Chinese goods as part of the US president’s response to ‘China’s role in producing Fentanyl‘.
According to reports, Apple plans to source more than 60m iPhones sold in the US annually by the end of 2026 from India. This commitment would require more than doubling iPhone assembly in India. The company has already been ramping up production in India and diverting iPhones assembled in the country to the US.
Apple Inc. has been actively expanding its presence in India since 2017, with a focus on making its products more affordable and accessible to the local market.
The company set up its first retail store in Bengaluru and has since opened several others across major cities.
Apple's iPhone sales have seen significant growth in India, driven by increasing demand for premium smartphones.
According to reports, Apple's revenue from India grew 24% year-over-year in 2020, making it one of the company's fastest-growing markets globally.
Analysts do not expect Apple to move iPhone production to the US, despite the White House insisting that the manufacturing of an American tech product will ultimately return home. Experts have played down the prospect, citing the high cost of assembling iPhones in the US. A study by Wedbush Securities found that the cost of an American-made iPhone would more than treble if production was shifted to the US.
The cost of manufacturing iPhones in the United States is influenced by various factors, including labor costs, materials, and production overhead.
According to a study by the Boston Consulting Group, the average cost of producing an iPhone in the US is around $500-$600 per unit.
This is significantly higher compared to countries like China, where labor costs are lower.
The high cost is attributed to the need for US manufacturers to meet stricter labor laws and regulations, as well as higher material and production expenses.
Despite the challenges, Apple has already chartered cargo flights to ferry 600 tons of iPhones – or as many as 1.5m devices – to the US to ensure sufficient inventory in a key market. The company’s main Indian suppliers, Foxconn and Tata, shipped almost $2bn worth of handsets to their largest market in March.
Apple’s shift towards India marks a new chapter in its manufacturing strategy. While there are challenges ahead, the tech giant is taking steps to reduce its reliance on China and meet the growing demand for iPhones in the US. As the company continues to navigate the complexities of global trade policies, one thing is clear: the future of iPhone assembly will be shaped by Apple’s decisions in India.
