In late April, Reuters reported that Apple was accelerating plans to shift the manufacturing of all iPhones sold in the US from China to India by the end of 2026.

The tech giant was said to be discussing operational details with the likes of Foxconn and Tata, and insisted that the process was confidential. What is not confidential, and was also mentioned in the Reuters story, is the reason why one of the world’s largest smartphone manufacturers wants to move its main production base.

Like many other global companies, Apple wants to avoid falling victim to another episode of what is now commonly known as ‘the tariffs war’ between the US and China. Despite this week’s announcement of a deal between the two sides, the constant unpredictability and historical tension in ties is forcing many global brands to make tough decisions.

Soon after returning to the White House, President Donald Trump announced tariff increases of up to 145% on products imported from China. That’s obviously bad news for Apple.

In a partial relief for the industry though, the President last month announced a temporary reprieve from tariffs for certain products, including smartphones and consumer electronics.

But his aggressive policy had already left a huge dent in Apple’s shares, with the company reportedly losing up to $640 billion in shares in a three-day rout in early April. Later reports put that figure at around $700 billion.

Faced with an unpredictable policy stance from White House, and counting the days on a temporary reprieve, Apple seems to have decided it is finally time to make the move.

Indian journey so far

It is important to note that the smartphone maker is no stranger to the Indian market, and has already established a footprint there over the past decade, both in software development and manufacturing.

In 2016, CEO Tim Cook visited the country and announced the establishment of an iOS developers lab in the city of Bengaluru, often referred to as India’s own Silicon Valley. A year later, in May 2017, the company confirmed it had started manufacturing a small batch of the iPhone SE models in the same city. It was a huge step at the time.

The manufacturing of more top-tier models in India, such as the iPhone 11, was confirmed in July 2020, though at the time it lagged behind the onset of production in China by about nine months.

“We estimate the impact [from Trump’s tariffs] to add $900 million to our costs”

Tim Cook, CEOm, Apple

That gap in production ended in September 2023 when it was confirmed that Indian-made iPhone 15 models would be available for sale on the same day as those made in China. It was an important milestone in the company’s constant efforts to diversify its supply chain and reduce its reliance on its China-based manufacturing plants.

But producing in small batches is one thing. Both Apple and Indian manufacturers have proved they can work together. Manufacturing enough iPhones to feed the entire US market is a far greater challenge.

According to figures by Statista, more than 50% of smartphone users in the US last year used an iPhone. Around 60 million iPhones are sold in the country each year.

Challenges ahead

India is already making one in five iPhones used worldwide, according to some reports. Between March 2024 and March 2025, the country assembled $22 billion worth of iPhones. What is even more important, especially in the context of moving away from China, is that that figure shows a 60% increase in production in India over the previous year.

This is important because, as reported by the FT, Apple will have to double its current production capacity in India if it wants to feed the entire US market from there. A 60% increase in production in a single year would suggest that target is achievable. But it won’t be an easy ride for either side, and there are certain challenges along the way.

First, iPhones and other Apple devices are assembled in China and India. The entire production process involves many other stages and take place in other destinations around the world. China has remained the ideal choice for assembling purposes due to its globally spread and efficient supply chain network. In other words, it is a lot easier to bring different components of an Apple device from other locations into China, assemble them to get the finished product, and then ship them out around the globe.

As things stand, China has a huge upper hand, a position so strong that it could be described as being akin to a monopoly, over India and other countries when it comes to supply chains for global trade. That advantage is set to continue.

Second, the main argument behind Trump’s tariffs policy is that his administration wants to bring manufacturing back to the US, and create jobs for Americans. In that context, a move from China to India may be a temporary pivot for Apple, however it does not guarantee protection from a similar scenario in the future.

Both US and Indian officials are working closely to finalise a trade deal. But we simply don’t know if a deal would give India any exemption from future tariffs. Apple could possibly face exactly the same challenge again, this time in India.

Technology and skills

Establishing a much larger manufacturing base in India is not merely about shifting equipment from once place to another. It’s also about transferring skills and technology. Given the strained political and military ties between India and China, and their rivalry in the economic and trade sectors, Apple could potentially find itself sandwiched in another regional power struggle.

According to Navkendar Singh, associate vice president at IDC India: “You need the expertise from China. Chinese engineers and other people, they have to come and setup the [production] lines.” And, given how things work in China, there is no guarantee that authorities in Beijing will willingly allow the transfer of a skilled labour force to a regional competitor such as India.

The quality of production also matters hugely. Back in 2023 the FT reported that iPhone casings made by Apple’s Indian manufacturing partner Tata were defective. According to the report, half of the casings built at the Indian plant did not meet Apple’s own goal of zero defects. People familiar with the matter told the paper at the time that things were improving, but the road ahead was long.

Also, experts argue that one of the most important stages in iPhone manufacturing is the semiconductor fabrication, or the creation of processing chips. That still happens in Taiwan, and India, according to Singh, is at least five to 10 years away from being able to produce processing chips of the same standard.

Geopolitics

We mentioned earlier that China won’t just sit back and allow its skilled labour force move to India and start manufacturing iPhones for a regional rival. Beijng could use all sorts of tactics, from banning skilled workers from moving to India, to using its near monopoly to disrupt global supply chains and make life difficult for others.

And there could also be more dramatic scenarios, such as the invasion of Taiwan by China. Beijing is already building barges, something that could make a potential takeover a lot easier (though there are historical precedents that suggest that building barges does not automatically lead to a successful invasion).

“Both China and the United States have an interest in preserving much of their economic relationship.”

CFR analysis

Other recent events could also have an impact on global manufacturing and trade in the region, such as the latest military tensions between Indian and Pakistan. China not only has its own territorial disputes with India, it has also, traditionally, remained a close ally of Pakistan and has backed Islamabad during such episodes in the past.

Recent skirmishes between the two sides were enough to disrupt major events in India, such as the suspension of the ongoing Indian Premier League (IPL) season, the world’s most expensive and prestigious franchise cricket tournament.

In short, Apple’s manufacturing bases are located in regions historically known for political and military instability. And there is always the possibility of events which are beyond its control, but detrimental to its operations and finances.

Too big to fail?

It would be too simplistic to suggest that the latest episode will bring about any dramatic or long-term pause to US-China trade relations. Bilateral trade between the two is simply to beneficial to end, and too big to fail. According to a recent analysis by the Council on Foreign Relations (CFR), US companies are currently earning hundreds of billions of dollars annually by operating in China.

At the other end, the US is China’s largest export destination, and the country’s economic outlook has changed dramatically since it joined the World Trade Organisation in 2001.

According the CFR, the US’s policy to increase tariffs and put sanctions on China has so far failed to achieve the desired outcomes, as China continues to pose a threat to US interests.

At the same time, experts have told the CFR that an aggressive or unilateral tariffs policy raises questions about the US’s image as a champion of fair trade, and gives China the moral upper hand.

According to a separate analysis by the Carnegie Endowment of International Peace, the US’s decoupling from China has a limit, which could be reached in the next decade. The report states: “Both China and the United States have an interest in preserving much of their economic relationship,” and argues it is time common sense prevails before they cause further damage to each other and the rest of the global economy.

It is also important to note that, according to the World Bank, the US and China jointly make up 43% of global GDP, and 48% of global manufacturing output.

Any long term trade tensions and aggressive policies could have far greater implications, not just for the world’s two largest economies, but also for the global economy.

What next?

Apple’s India migration is a sub-scene within a much larger drama, namely a geopolitical tussle between the world’s two largest economies. Some smart negotiation skills and some good luck at this stage can go a long way.

For example, the company would like to remain in President Trump’s good books. The benefits of being there are obvious, such as the temporary tariffs reprieve on smartphones and consumer electronics.

Last week, CEO Tim cook gave an indication of how much potential tariffs hikes could cost Apple when speaking at a quarterly earnings call. “Assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs,” he said.

And that is why he has been holding serious negotiations with White House officials behind the scenes. We will soon know if his backing and support for Trump’s election campaign pays off.

The outcome of the ongoing trade negotiations between Washington and New Delhi will also be important, and it’s another area where Cook can use his influence to push for a favourable outcome.

India has already offered zero-to-zero tariffs on auto-parts and steel imports from the US. We will soon find out what Washington’s return offer is, and whether it will be good news for Apple’s Indian ambitions.

For now, a sense of calm has returned after both the US and China agreed to cut tariffs on each other by 115%. But deeper and long-term mistrust and grievances still exist. And global brands such as Apple would be unwise to not prepare for another escalation.