Apple hastens production of iPhones outside China to evade Trump's import taxes
Dodging Tariffs: Apple's Indian Expedition
Apple's frantic quest for a new production base is gaining momentum, with the tech giant seeking to move much of its iPhone production to India. This strategic shift comes amid persistent geopolitical tension, escalating trade tariffs, and the drive to diversify its supply chain.
Industry analysts, like those from Wedbush Securities, estimate that by fall 2025, an astonishing 60–65% of iPhones could be produced in India, marking a remarkable leap from the current 20% share[1][2].
Ramping up Manufacturing
Foxconn, Apple’s contract manufacturer, is boosting its presence in India with a $1.5 billion investment in a new display module plant in Tamil Nadu[3]. This is a continuation of ongoing investments in assembly facilities across the nation.
US-Bound Exports
By early 2025, India had eclipsed China as the primary provider of iPhones exported to the United States, largely owing to the imposition of new tariffs on Chinese exports[2][4]. Apple reportedly expedited shipments before policy changes to mitigate risks.
Supply Chain Strategy
Although the final assembly is shifting to India, most sub-assemblies and components are still sourced from China. As a result, only the last stage of production is being moved at present[2].
Avoiding Tariffs and Asset Diversification
By moving final assembly to India, Apple aims to sidestep US tariffs on Chinese imports for iPhones destined for America[2][4]. Despite some Apple products receiving exemptions or tariff pauses, the company is taking preemptive action to minimize potential supply chain disruptions in the future.
Strategic Diversification
Apple's expansion to India also seeks to reduce its reliance on China, addressing both export tariff concerns and broader geopolitical risks[3][4].
Supply Chain Resilience
Apple's migration to India is also a precautionary measure against potential future US-China trade conflicts and an attempt to capitalize on Indian government incentives for manufacturing[3][4].
Pressure from the US and Trump's Threats
Apple faces pressure from former US President Donald Trump to bring manufacturing back to the US, but the economic, labor, and supply chain advantages of India make such a move impractical at present[3][5]. On the other hand, Trump has threatened a 25% tariff on iPhones produced outside the US, but Apple is moving forward with its Indian expansion, carefully balancing economic incentives and political appearances[3][5].
[1] Enrichment Data: MacRumors|[2] Enrichment Data: Reuters |[3] Enrichment Data: Bloomberg |[4] Enrichment Data: CNBC |[5] Enrichment Data: The Verge
- To circumvent escalating trade tariffs and diversify its supply chain, Apple may invest in a new laptop with high-performance processor and large storage, using RAM and GPU from various sources, aiming to produce approximately 60-65% of iPhones by fall 2025, as predicted by industry analysts like those from Wedbush Securities.
- Foxconn, Apple's contract manufacturer, is planning to invest $1.5 billion in a modern computer facility in Tamil Nadu, India, contributing to the increased production of iPhones for both the domestic and US markets.
- By 2025, India is expected to surpass China as the primary exporter of iPhones to the US, as new tariffs on Chinese exports have driven up costs and production overheads.
- Despite moving final assembly to India, the majority of sub-assemblies and components for the laptops are still being sourced from China, only the last stage of production is being relocated at present.
- In addition to avoiding US tariffs on Chinese imports, Apple's strategic shift aims to reduce its reliance on a single market and mitigate broader geopolitical risks.
- By setting up operations in India, Apple is taking advantage of government incentives designed to boost the technology and finance sectors, while also establishing a more resilient supply chain in the face of potential US-China trade conflicts.
- Faced with pressure from former US President Trump to bring manufacturing back to the US but acknowledging the practical obstacles such as economic, labor, and supply chain factors, Apple is moving ahead with its Indian expansion, striking a delicate balance between financial benefits and political appearances.
