As the US-China trade tensions are escalating, Apple has taken a strategic decision to increase the production of its iPhone in India. The economic war between the US and China has led to a big loss in many industries, especially prestigious ones like mobile manufacturers, including Apple. Apple made a big move to counter this by setting up its manufacturing hubs in India. This is also a great opportunity for India's economy because it will reduce the iPhone cost in the Indian market and generate over 50,000 jobs.
From the sources, the company has planned to make India a central hub for its iPhone production, especially targeting the US and Indian market, and recently, a new iPhone assembly plant commenced its operations in Tamil Nadu, which is controlled by Tata Electronics. A second facility is about to be done in Bengaluru, developed by Foxconn, and the cost behind the development is estimated at $2.6 billion.
As per the other sources, the hub will come into production in the upcoming days and will assemble phones at a rate of 3 to 4 hundred units per hour for the iPhone 16 and 16e models. The iPhone assembly hub will be completed by the end of 2027.
Apple CEO, Tim Cook, states that "For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin, and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the U.S. China would continue to be the country of origin for the vast majority of total product sales outside the U.S." He focuses that the trade highly impacted by the tariffs on importing from China because apple has its one off major hub there. Although the total impact has not yet been calculated, they estimate it to be around $900 million.
According to Apple, these tariffs would not have a significant impact, and they are expecting stronger earnings after evaluating the company's fiscal second-quarter results since the President of the United States, Mr. Donald Trump, announced a 1445% rise in tariffs on Chinese goods, which includes iPhones.
A global perspective on US-China trade tensions concerning iPhones
As with a global perspective, it is still unclear when this trade war will end, but this uncertainty will continue. Senior Vice President at CFRA Research, Angelo Zino, has also commented on this. He said, "While it's unclear how long the trade war with China will continue, Apple's shift is part of a larger strategy that may include more US component manufacturing". He added, "Apple must think long term with manufacturing capacity," Zino said. "We think Apple will look to double its India iPhone capacity in the next two to three years to help mitigate future China-US tensions."
According to Zeno, "That is clearly where the value of Apple lies for the Trump administration, in our view, rather than assembling its devices," it could potentially increase modem and internally designed processors in the US.
What's the future of manufacturing iPhones in India?
After the major announcement of setting up India as a global manufacturing hub for iPhones, India is emerging as a global manufacturing hub for the mobile and tech industry, and people are taking it in a very optimistic perspective. Back in 2017, when the company shifted its manufacturing to India, India appeared as a major player in the global manufacturing market. According to GSM Arena, "reports from April 2024 indicate that India now manufactures around 14 per cent of all iPhones globally, with analysts predicting this number could rise to 25 per cent by the end of the year."
Apple is aiming to double its production in India so that it can meet the demand for iPhones in the US and other countries. They also have the objective to manufacture 60 million devices annually by the end of 2026.
There were some reports that say, "The Indian government has imposed a 26 % tariff on import of the US products, which has been paused for 90 days temporarily to allow for ongoing negotiations between Washington and New Delhi."
Muzammil Hassan, Head of patent portfolio management and monetization of Quandary Peak Research in India, said, "I don't think it's a temporary move." Moreover, Hassan said, "Foxconn has been training thousands of employees in their factories in Tamil Nadu. In fact, there were reports that the iPhone 17 might be developed and manufactured exclusively in India. I'd say Apple is late to the party. Samsung, Oppo, Vivo, and Motorola, among others, were already manufacturing their phones in India."
There is some speculation that these developments are because of US Vice President JD Vance, who is currently in India. Apple's global manufacturing strategy has seen India emerge as a crucial player. Apple aims to expand its production footprint across the country, and this shift would be a great cause.