Apple to Move US Phone Assembly to India in a Strategic Shift Away from China

3 days ago

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Apple to move assembly of US phones to India in shift away from China

(WE) — In an unprecedented move that signals a shift in global manufacturing dynamics, Apple Inc. plans to move the assembly of a majority of its iPhones sold in the United States to India by the end of 2026. This major step comes as the Cupertino-based tech giant navigates through the ongoing trade tensions between the U.S. and China, which have escalated significantly during former President Donald Trump’s tariff war. The shift, expected to increase Apple’s production in India, will significantly reduce its reliance on China, where approximately 80 percent of the 60 million iPhones sold in the U.S. are currently produced.

Apple’s Strategic Shift Amid Rising Tariffs

As the U.S. increases tariffs on Chinese imports, Apple looks for ways to reduce product costs. The company has relied on China for most iPhone production. However, recent tariffs highlight the risks of this reliance. By expanding production in India, Apple can reduce tariffs and strengthen its supply chain for the U.S. market. The shift also protects Apple from potential disruptions caused by geopolitical tensions.

The Financial Times reported that Apple is in talks with Foxconn and Tata Group to execute this plan. Both partners are already involved in Apple’s production in India. Foxconn has expanded in India, while Tata has long been a part of India’s tech sector.

India’s Growing Role in Global Smartphone Manufacturing

Apple’s decision to move production to India comes as India positions itself as a global hub for smartphone manufacturing. Earlier this year, India removed import taxes on certain components used in phone production, benefiting companies like Apple.

India’s lower labor costs and business-friendly environment make it attractive to global tech companies. Apple has already increased production, assembling $22 billion worth of iPhones in the year ending March 2025, a 60% increase. However, India still produces only 20% of the world’s iPhones, highlighting the scale of the challenge.

The Costs and Challenges of Shifting Production

Moving production to India has challenges. Manufacturing in India is 5-8% more expensive than in China. Analysts like Dan Ives from Wedbush Securities note that the shift won’t immediately reduce Apple’s dependence on China. Apple’s supply chain still relies on Chinese manufacturers, and India will take years to become a major player in iPhone assembly for the U.S. market.

India’s infrastructure poses challenges too. As Babak Hafezi, CEO of Hafezi Capital, notes, issues like traffic management could increase production times, raising costs and hurting Apple’s competitiveness.

Delays and Roadblocks in the Transition

Apple’s move to India has encountered delays. Reuters reports that Chinese authorities have made it difficult for Apple’s suppliers, like Foxconn, to move operations. Some equipment shipments for Indian production have been delayed by up to four months. These delays point to the political and logistical challenges Apple faces.

Despite setbacks, Apple is determined to proceed. Analysts predict it could take years before a significant portion of iPhone production shifts from China to India. Dan Ives estimates the transition could cost Apple between $30 billion and $40 billion.

The Role of the U.S.-India Trade Relationship

Apple’s shift to India coincides with the U.S. exploring closer trade ties with India. U.S. Vice President JD Vance met with Prime Minister Narendra Modi to discuss trade agreements. The two sides have made progress, signaling India’s growing role in the U.S.’s strategy to reduce reliance on China.

The U.S.-India trade relationship is expected to grow. A bilateral trade agreement could provide further incentives for Apple to expand in India, offering cost advantages and access to a larger market.

Apple’s Financial Performance Amidst the Shift

Apple’s financial performance will be scrutinized as it shifts production. The company will release its quarterly earnings soon, and analysts will look for signs of impact from the move to India. Although Apple has seen growth in India, shifting production may affect short-term profitability.

Apple’s decision to expand in India reflects global manufacturing trends. As companies reduce reliance on China, India is becoming a key hub, particularly in tech manufacturing. India’s growing workforce and favorable policies make it an attractive location for companies like Apple.

A Long Road Ahead

Apple’s shift to India represents a major move away from China. The transition promises to reduce dependence on China and mitigate tariff impacts, but challenges remain. Higher production costs, logistical issues, and political roadblocks are all obstacles.

Apple’s success will depend on overcoming these hurdles and building a strong manufacturing base in India. As global manufacturing patterns continue to evolve, Apple’s move may influence other companies to reconsider their supply chains.