Shifting Sands: Apple’s Manufacturing Strategy

The $3 trillion technology behemoth is targeting as early as next year to begin this notable transition, according to sources familiar with the matter. This potential relocation reflects a broader trend among multinational corporations to diversify their manufacturing locations to mitigate risks associated with geopolitical tensions and tariffs.

Tariffs and Trade Wars: A Catalyst for Change

Apple has felt the sting of aggressive tariff policies,notably those enacted over the past several years. The prospect of hefty import taxes on its Chinese-made products entering the U.S. once made the company among the biggest stock market casualties. At one point, Apple was deeply affected by the financial prospect. The tech juggernaut was “swept up in Trump’s aggressive tariff policies,” as one report noted, “with the iPhone maker at one point among the biggest stock market casualties because of the prospect of its Chinese-made products being hit with a hefty import tax when they reach the US.”

While a White House decision to “exclude smartphones” from the most severe Chinese tariffs offered some relief, Apple still faces an ongoing financial burden. The company is subject to “a 20% levy on all Chinese goods as part of the US president’s response to China’s role in producing Fentanyl.” This situation creates a strong incentive for Apple to explore alternative manufacturing locations.

The Indian Option: Scaling Up Production

The intricate manufacturing process of iPhones involves more than 1,000 components sourced from across the globe, though the final assembly predominantly occurs in China. While Apple maintains secrecy about its production methods, industry analysts estimate that approximately 90% of its iPhones are assembled in China. This concentration poses potential vulnerabilities in the face of evolving global trade dynamics.

Apple reportedly intends to source from India the more than 60 million iPhones sold annually in the U.S.by the end of 2026. Fulfilling this objective “would require more than doubling iPhone assembly in India.” The company has already been increasing production in India, redirecting iPhones assembled there for the U.S. market. Apple also “chartered cargo flights to ferry 600 tonnes of iPhones – or as many as 1.5m devices – to the US to ensure sufficient inventory in an important market.”

Key Indian suppliers,including Foxconn and Tata,have substantially increased their exports to the U.S. Apple’s main Indian suppliers, Foxconn and Tata, “shipped almost $2bn worth of handsets to their largest market in March as Apple sought to offset the impact of looming tariffs.” The company operates three plants in India and recently extended operations at its largest Foxconn India factory in Chennai.

Beyond iPhones: A Broader Shift in Manufacturing

the potential shift in iPhone production represents a significant,but not total,change to Apple’s manufacturing footprint. A ample portion of other Apple products remain assembled in China.more than “5o% of Apple’s Mac products and 80% of its iPads are assembled in China,” according to data from U.S. investment bank evercore. Apple watches are largely built in Vietnam.

made in America: A Distant Possibility?

Despite calls from some quarters, including the White House, for Apple to bring iPhone production back to the U.S., analysts believe this scenario is unlikely. While the U.S. president’s press secretary, Karoline Leavitt, told reporters that Apple’s recent declaration of a $500 billion investment indicated a U.S.-made iPhone was possible, that claim has been largely disputed. “If Apple didn’t think the US could do it, they probably wouldn’t have put up that big chunk of change,” she said.

Though, experts are skeptical. Wedbush Securities, a U.S. financial firm, estimates that the cost of an American-made iPhone would more than triple if production where moved to the U.S. “If consumers want a $3,500 iPhone we should make them in New Jersey or Texas or another state,” said Wedbush analyst Dan Ives. Cost considerations, along with existing supply chain infrastructure, make a large-scale return to U.S. manufacturing improbable in the near term.

Addressing the Counterargument: The Viability of US Production

While some argue that Apple should bring manufacturing back to the U.S., citing potential job creation and economic benefits, the practical realities present significant challenges. Fraser Johnson, a professor at Ivey Business School in Canada and an apple supply chain expert, said that the U.S. economy lacks the infrastructure and labour force needed to assemble iPhones efficiently. “To train 200,000-300,000 people to come in and assemble iPhones is simply not practical,” he said. The scale and flexibility of the labor force required for iPhone assembly are difficult to replicate in the U.S. given current economic conditions and labor market dynamics.

FAQ: Apple’s iPhone Production Shift