Recently, amid the chaos of Trump’s tariff war, multiple media reports have suggested that Apple, the world’s most valuable technology company, is planning a major restructuring of its manufacturing strategy. If accurate, Apple is preparing to shift all iPhone production meant for the U.S. market to India by 2026. Reportedly, several factors are influencing this historic decision—including growing geopolitical tensions, supply chain vulnerabilities, and India’s effort to position itself as a global electronic hub. Apple’s decision to shift a major share of its manufacturing away from China raises various questions.
Why is Apple shifting its U.S. iPhone production to India?
Apple’s extreme reliance on China for manufacturing has proven costly, especially during the recent trade war avalanche in the U.S. stock market. In the first week of April, Apple lost about 20% of its value—nearly $640 billion in market capitalization—within just three trading days. Although its shares recovered most of the lost value after the Trump administration decided to exempt smartphones and computers from 125% tariffs imposed on Chinese imports, Apple still faces a 20% tariff on all Chinese goods. Even this levy could add significantly to Apple’s annual expenses. According to reports, Apple expects to incur an additional $900 million in costs this quarter due to tariffs. Moreover, the company remains deeply concerned about the uncertainty surrounding the future of the trade war.
While escalating tensions between the U.S. and China have created an unpredictable environment for American firms reliant on Chinese manufacturing, this is not the only factor driving Apple’s strategic shift. At least since the COVID-19 pandemic, Apple has been highly aware of the risks posed by over-concentrated supply chains. Prolonged lockdowns and factory closures in China between 2020 and 2022 disrupted Apple’s production schedules. Since then, it has been exploring possible avenues to geographically diversify its supply chain.
In this context, Apple has found India to be an attractive manufacturing destination for several reasons. Firstly, through initiatives like “Make in India” and the Production Linked Incentive (PLI) scheme, the Indian government has incentivized electronics manufacturing. Secondly, major Apple suppliers such as Foxconn and Pegatron have already established facilities in states such as Tamil Nadu and Karnataka, creating a growing ecosystem that offers Apple a feasible and scalable alternative. Finally, India’s growing middle class offers a huge market opportunity.
Thus, by producing more devices in India, Apple can avoid high tariffs imposed on goods imported from China, offer more competitive pricing, and strengthen its position in one of the world’s fastest-growing smartphone markets. All of this while reducing exposure to U.S.-China tensions.
How prepared is India to handle Apple’s largescale production needs?
For years, India has been working to create a favourable environment for electronics manufacturing by reducing import duties on components, improving infrastructure, and introducing schemes (such as PLI) to attract global manufacturers. As a result, manufacturing giants like Foxconn, Wistron, and Pegatron have established factories in the country. Domestic players like Tata have also made significant investments to position India as an alternate electronics manufacturing hub.
Apple began assembling phones in India in 2017, partnering with Taiwanese manufacturer Wistron Corporation. The first assembly facility, located in Peenya near Bangalore, began operations by assembling the iPhone SE. Later, the company opened a larger plant in Kolar, Karnataka, with the capacity to employ nearly 10,000 workers. In 2020, the plant witnessed violent unrest over alleged labour violations, causing substantial damage. The Tata Group acquired this unit from Wistron in 2023, becoming the first Indian company to manufacture Apple products.
Foxconn, the largest manufacturer of Apple products, began assembling iPhones in India in 2019 at its facility in Sriperumbudur, Tamil Nadu. In 2022, Pegatron, the second largest Apple supplier, also began assembling iPhones at its Chennai plant. Tata Electronics has since acquired a 60% stake in Pegatron’s unit in India and built a massive facility in Hosur, Tamil Nadu, to scale up high-end component production, including casings and other critical parts.
Recognizing India’s potential, Foxconn, Pegatron and others have pledged additional investments to expand operations. Meanwhile, the Indian government has also implemented reforms to simplify land acquisition, labour laws, and export procedures. Electronics manufacturing clusters have been established in states like Tamil Nadu and Karnataka to support this growth.
What challenges could Apple face in relocating iPhone production to India?
One of the biggest hurdles Apple faces in relocating iPhone production to India is replicating the scale, speed, and supply chain efficiency that exists in China. Over the last two decades, China has developed a deep and dense supplier ecosystem—from chipmakers and display manufacturers to logistics providers—all located within proximity of major factories. Such a concentrated network of component suppliers drastically reduces costs and turnaround time, enabling Apple to produce hundreds of millions of devices quickly and efficiently.
However, India’s electronics supply chain is still nascent. Many key components still need to be imported, leading to higher costs and longer lead times.
Another major challenge is maintaining Apple’s famously stringent quality control standards. According to some reports, nearly half of the iPhone casing produced at Tata’s facility in Hosur failed to pass quality checks. Producing millions of devices with the precision Apple demands will require intensive worker training, advanced quality assurance systems, and a reliable network of suppliers that can meet strict technical specifications.
India’s supply chain is not yet as deep or as advanced as China’s, and several key components—such as advanced semiconductors, OLED displays, camera modules, printed circuit boards (PCBs), and specialized connectors—are still largely imported from China. As India’s Make in India initiative gained momentum, China reportedly delayed or restricted exports of critical equipment and high-tech components to India, causing production bottlenecks. Such disruptions have significantly impacted electronics manufacturing, particularly iPhone assembly.
Infrastructure presents yet another challenge. While India’s logistics and industrial infrastructure is improving, it does not yet match the efficiency of China’s highly integrated logistics and transport systems. Additionally, India faces a skill gap in high-tech manufacturing, especially in areas like precision assembly and advanced electronics.
Due to all these issues, manufacturing iPhones in India may currently cost 5 to 10 % more than in China.
Despite these hurdles, Apple expects India to produce 25% of its global iPhone output by 2028, up from just 14% today, suggesting confidence in India’s potential to scale up.
