Apple to Manufacture All U.S.-Bound iPhones in India Amid Intensifying U.S.-China Trade Tensions

In a bold strategic shift, Apple is set to manufacture all iPhones intended for the United States market in India, The Financial Times reported, citing sources familiar with the matter. The decision comes as a direct consequence of escalating trade tensions between the U.S. and China under President Donald Trump’s second term, which has forced the Cupertino-based tech giant to diversify its production network more aggressively.

A Strategic Exit from China

Apple’s move is seen as a proactive response to the Biden-to-Trump administration transition, which reignited tariff disputes. President Trump’s trade policies have led to proposed tariffs as high as 145% on imports from China, effectively rendering Chinese assembly unsustainable for iPhones destined for the U.S. market. Although smartphones had previously been spared the full brunt of tariffs, Apple is currently paying a 20% import rate—established before Trump’s re-election—and faces the risk of far more severe duties moving forward.

Despite CEO Tim Cook’s efforts to negotiate with Washington, no firm exemption has materialized. Apple is now accelerating its long-term diversification plans, with India emerging as the most viable large-scale alternative.

India’s Rising Role in Apple’s Global Supply Chain

Apple’s pivot to India began modestly in 2017 with Wistron assembling iPhone 6s and iPhone SE models in Bengaluru. Since then, manufacturing in India has ramped up considerably, aided by favorable local policies and strong demand for job creation in the region.

As of April 2024, 14% of global iPhone production was taking place in India. Analysts expect this to reach 25% by year-end, but with the latest developments, that number may rise even higher. Apple’s new goal is to manufacture over 60 million iPhones annually in India—the total number of units sold in the U.S. each year—by 2026.

India-U.S. Trade Talks Underway

While India has also faced a 26% tariff on goods imported into the U.S., the Biden administration paused the measure for 90 days to allow New Delhi room for negotiations. Current U.S. Vice President JD Vance is in India this week, reporting that bilateral talks are making “very good progress.”

For Apple, this diplomatic breathing room offers a narrow window to realign its global operations without severe short-term financial penalties.

Investors Brace for Earnings Impact

The United States remains Apple’s largest single market, accounting for 28% of global iPhone shipments in 2024. As the company gears up for its quarterly earnings announcement next week, analysts remain uncertain about the long-term financial implications of the shifting production landscape and tariff environment.

Still, many see Apple’s move to India as a strategic necessity—one that reflects broader geopolitical realignments in global supply chains and the growing economic clout of India in the tech manufacturing sector.