Apple is set to transfer the assembly of all iPhones intended for the U.S. market from China to India by the end of 2026 in a significant realignment of its manufacturing strategy. This decision comes as a response to escalating trade tensions between the U.S. and China, which have led to increased tariffs on Chinese imports, making production in China more costly for Apple. Currently, over 60 million iPhones sold annually in the U.S. are assembled in China. The move to India aims to mitigate the financial impact of tariffs and diversify Apple's supply chain.

Scaling Up Operations in India

To facilitate this transition, Apple is expanding its manufacturing footprint in India through partnerships with companies like Tata Electronics and Foxconn. These partners have been importing components from China and assembling iPhones locally. In the first quarter of 2025 alone, over three million iPhones were shipped from India, despite a contraction in the broader smartphone market. Foxconn reported exports worth $1.31 billion in March, contributing to a total of $5.3 billion in shipments to the U.S. this year. Apple's plans include doubling its current production capacity in India and opening four new retail stores in Bengaluru, Pune, Delhi-NCR, and Mumbai.

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Navigating Tariffs and Trade Agreements

The U.S. has imposed tariffs exceeding 100% on certain Chinese imports, with a 20% duty specifically on Chinese-made smartphones entering the U.S. In contrast, India faces a paused reciprocal tariff of 26%, and negotiations for a bilateral trade agreement with the U.S. are underway. U.S. Vice President JD Vance recently visited India and described the progress on this front as "very good," indicating that India could become the first country to secure a trade deal with the U.S. and avoid reciprocal tariffs.

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A Broader Industry Trend

Apple's shift is part of a larger trend among tech companies seeking to diversify their manufacturing bases. Samsung is reportedly considering moving smartphone production from Vietnam to India following a 46% tariff on Vietnamese imports. Similarly, Google's parent company, Alphabet Inc., is in discussions with manufacturing partners like Dixon Technologies and Foxconn to relocate part of its Pixel smartphone production from Vietnam to India.