Apple’s iPhone production shift is underway as the company moves its U.S.-bound manufacturing from China to India by 2026. The decision follows the imposition of a 145% tariff on Chinese imports by President Donald Trump in 2025, with smartphones temporarily spared but still facing a separate 20% levy. China’s retaliatory tariffs have further raised risks and costs for companies relying heavily on Chinese manufacturing.
The COVID-19 pandemic exposed vulnerabilities in China-centric supply chains, with production disruptions prompting companies like Apple to seek more resilient alternatives. Apple’s decision to adopt “friend-shoring” – relocating manufacturing to politically stable nations – fits into a broader strategy aimed at reducing exposure to adversarial nations. India, a key ally, has emerged as Apple’s top alternative.
Apple plans to shift the assembly of all iPhones sold in the U.S.—roughly 60 million units a year—by the end of 2026. Production is expected to start as early as 2025. Currently, India produces 20% of Apple’s global iPhone output, valued at $22 billion annually, with $17.4 billion exported, mainly to the U.S. Foxconn and Tata Electronics are major partners leading India’s iPhone production efforts.
The shift includes a major milestone: Apple is managing the New Production Introduction (NPI) phase for the iPhone 17 in India, a task historically reserved for its Chinese plants. This underlines India’s growing significance within Apple’s supply chain. Government programs like “Make in India” and a proposed $2.7 billion subsidy plan have further bolstered India’s appeal.
In addition to manufacturing advantages, India’s domestic market offers growth opportunities. Apple holds an 8% market share in India with $8 billion in sales as of fiscal 2024 and has expanded retail operations with stores in Mumbai and Delhi, with more planned.
However, challenges persist. Apple remains heavily dependent on Chinese suppliers for key components, and shifting the entire supply chain could take years. Infrastructure and manufacturing efficiencies in India are still developing, and quality concerns at Indian factories have been reported. Labor disputes and the need for skilled expertise also present risks.
The economic and geopolitical implications are substantial. China stands to lose significant revenue, and the shift comes at a time of strained Sino-Indian relations. Meanwhile, India’s manufacturing sector could see major gains, with ripple effects encouraging other tech companies like Samsung and Google to consider moving operations.
For U.S. consumers, the move could help stabilize iPhone prices despite heavy tariffs on Chinese imports. An iPhone made in India could carry about $150 in additional costs due to Indian tariffs, compared to nearly triple that if sourced from China.
Apple’s broader vision aims to produce 25% of its global iPhone supply in India, up from the current 18-20%, with the potential for sales to reach $33 billion by 2030. Still, complete decoupling from China is unlikely in the short term. Apple continues to rely on China as a crucial market and manufacturing partner, even as it builds its future supply chain around India.
The shift highlights broader industry trends where companies are diversifying production to manage risks. Analysts view Apple’s response as swift and strategic, although success will depend on India’s ability to scale infrastructure, ensure quality, and train its workforce to meet Apple’s standards.
