Cupertino: Driven by escalating trade tensions between the United States and China, Apple will transition all iPhone production doomed to the U.S. market to India. According to GSM Arena, the shift follows ongoing trade policies and tariffs during the administration of former President Donald Trump. Apple’s decision to increase production in India coincides with a broader goal from China to diversify its manufacturing operations.
In the U.S. alone, more than 60 million iPhones are sold each year, and the company is seeking to reduce its reliance on China’s manufacturing industry and find a more economical and viable alternative. For Apple, this move is not completely new. The company’s shift to Indian manufacturing began in 2017 when it partnered with Taiwanese contract manufacturer Wistron to start producing iPhone 6s and iPhone SE models at a factory in Bangalore, India.
The initial motivation was a high import tax on Chinese goods imposed by the U.S. government. As the trade war between the two countries escalates during Trump’s presidency, Apple is increasingly trying to shift more production outside of China. According to GSM Arena, the April 2024 report shows that India is now producing about 14% of all iPhones worldwide, and analysts predict that this number may increase to 25% by the end of this year.
The company aims to double the production in India in India to meet U.S. demand for iPhones, with over 60 million devices a year by 2026. Production changes come at the same time as the Trump administration imposes positive tariffs on Chinese goods. Although Apple CEO Tim Cook tried to negotiate a violation of these tariffs, the GSM Arena report said such relief is unlikely to be achieved.
In fact, imports from China have been subject to 145% tariffs, which is challenging for companies like Apple that rely on Chinese manufacturing. Even before President Trump’s second term, Apple already faced a tariff rate of 20% on smartphones imported from China. However, Apple’s decision to step up production in India is not without its own challenges.
According to the GSM Arena, the Indian government imposed a 26% tariff on products from the United States, which was temporarily suspended for 90 days to allow ongoing negotiations between Washington and New Delhi.
These developments are currently in India by US Vice President JD Vance. India has become a key part of Apple’s global manufacturing strategy. As part of the transfer to India, Apple aims to expand its production footprint nationwide.
According to GSM Arena, the Bengaluru factory in the country, which initially began producing iPhone 6s and iPhone SE models, will now be a key site for producing newer iPhone models targeting American consumers. With these changes in production strategies, Apple is facing a period of significant uncertainty.
The company is preparing to report its quarterly earnings next week, with investors and analysts watching closely the trade situation and how Apple’s changing manufacturing strategies will impact its bottom line.
According to GSM Arena, the United States accounts for about 28% of Apple’s global iPhone shipments in 2024, which is crucial to the company’s financial performance.
But with the shift to India, Apple hopes to mitigate some of the financial impact of the tariff structure while continuing to meet U.S. demand for iPhones.
