Apple intends to transfer the assembly of American iPhones to India, aiming to lessen reliance on China amid escalating trade disputes, according to ongoing discussions with Indian outsourcing partners.
In the midst of Apple's battle with President Trump's trade war with China, the tech titan has set its sights on drastically increasing iPhone production in India, aiming to assemble the majority of iPhones sold in the US by 2026. This ambitious plan would more than double Apple's current output in the South Asian nation.
The move is a strategic step for Apple as it aims to mitigate the financial impact of rising tariffs on China. Currently, 80% of the 60 million iPhones sold in the US are produced in China.
According to reports, Apple is in discussions with its Indian manufacturing partners, such as Foxconn and the Tata Group, to bring this plan to fruition. This shift towards India is a natural evolution, as Apple has already expanded production there to counter Trump-era tariffs, shipping $2bn worth of iPhones in a single month in March 2022, a record for both Tata and Foxconn.
Prime Minister Modi has been actively promoting India as a global hub for smartphone manufacturing. Earlier this year, the Indian government eliminated import taxes for some mobile phone components, a move that benefits companies like Apple.
However, this transition won't come without costs. Manufacturing iPhones in India is reportedly 5-8% more expensive than in China. Analyst Dan Ives has estimated that Apple's plans to move iPhone assembly for US phones to India could cost the company between $30bn-$40bn.
Infrastructure concerns also loom large. With India's infrastructure facing significant issues like traffic and mobility, the costs associated with production could potentially increase.
"You need secure, continuous, and productive infrastructure to maximise manufacturing as best as you can and be globally competitive," Babak Hafezi, CEO of Hafeze Capital, stated.
Apple's shift towards India comes at a time when the US-China trade tensions have shown signs of easing. Meanwhile, trade talks between the US and India are ongoing, with US Vice President JD Vance recently meeting with Indian Prime Minister Narendra Modi, reporting "good progress" towards a bilateral trade agreement.
The announcement arrives just ahead of Apple's earnings report, scheduled for Thursday.
- This strategic move by Apple to increase iPhone production in India, aiming to assemble the majority of iPhones sold in the US by 2026, is a response to the financial impact of rising tariffs on China.
- In its discussions with Indian manufacturing partners like Foxconn and the Tata Group, Apple aims to mitigate these tariffs and potentially manufacture 80% of the 60 million iPhones sold in the US by 2026 in India.
- The Indian government's elimination of import taxes for some mobile phone components has benefited companies like Apple, who have already shipped $2bn worth of iPhones in a single month in March 2022, a record for both Tata and Foxconn.
- Despite the potential for increased costs due to manufacturing in India being 5-8% more expensive than in China, analyst Dan Ives estimates that Apple's plans to move iPhone assembly for US phones to India could cost the company between $30bn-$40bn.
- Infrastructure concerns also pose challenges, as India's current issues with traffic and mobility could potentially increase the costs associated with production.
- As US-China trade tensions ease and trade talks between the US and India progress, with US Vice President JD Vance reporting "good progress" towards a bilateral trade agreement, Apple's announcement to shift towards India comes at a critical time, just before its earnings report on Thursday.
