Trump's call for corporations to generate jobs in America finds a response from Apple, as they plan to transfer their production to... India.
Apple Ponders Shift of U.S.-Bound iPhone Production to India
In response to escalating global trade tensions, Apple is reportedly planning to relocate the production of all iPhones destined for the United States to India by the end of 2026. The move is a strategic response to President Trump's trade conflicts, with China subject to over 100% tariffs on imports to the U.S., while smartphones benefit from a 20% tariff exemption. In contrast, India faces 26% "reciprocal" tariffs, currently dormant during trade deal negotiations.
As part of a broader effort to diversify its supply chain, Apple began producing iPhones in India back in 2017. The production initially focused on lower-end models and remains supplementary, with only about one-fifth of global iPhone production occurring in India last year. However, the new plan would almost double Apple's manufacturing output in the country over the next two years, aiming for a production capacity of 60 million smartphones per annum.
It's important to note that the production of components for the iPhone will remain based primarily in China and Taiwan. The final iPhone assembly will then be carried out in India, effectively combining hundreds of pre-assembled components like fitting together LEGOs. The shift in assembly locations does not imply a change in the manufacturing of iPhone components, as the expertise and infrastructure primarily remain in China.
In light of these developments, it is clear that manufacturing in the United States remains a distant prospect. Despite investing $500 billion into American manufacturing, Apple's focus has largely been on server farms and data centers rather than electronic device production. The high labor and operational costs associated with U.S. manufacturing, combined with an economy geared toward services and scalable manufacturing capabilities abroad, make the production of iPhones (or similar products) in the U.S. both challenging and expensive.
Contrary to some assumptions, U.S.-India trade is beneficial for both parties. The U.S. sends money to India in exchange for the desired iPhones, rather than seeing this interaction as a simple win-lose scenario in which "America loses" when it imports from India. To this end, improving the U.S. economy somewhat reliant on cheap labor from abroad and bolstering domestic manufacturing of key products like computer chips can be pursued without disrupting the overall function and growth of the American economy due to increased tariffs or other protectionist measures.
In summary, Apple is weighing the possibility of shifting iPhone production destined for the U.S. market from China to India. This decision is driven primarily by factors such as diversifying the supply chain, potentially lower production costs, and capitalizing on India's growing manufacturing strength. Although the transition to full U.S.-based iPhone production would be costly and time-consuming, the more pressing barrier to Apple is the steep infrastructure and labor costs associated with manufacturing electronics domestically.
- The technology news outlet Gizmodo reports that Apple is considering a shift of U.S.-bound iPhone production from China to India.
- The move is part of Apple's strategy to diversify its technology supply chain and potentially lower production costs in response to global trade tensions.
- While iPhone component manufacturing will remain primarily in China and Taiwan, the final assembly will be carried out in India, leveraging India's growing tech manufacturing strength.
- The financial implications of producing iPhones in the U.S. are challenging due to high labor and operational costs, making the prospect of significant domestic production unnecessary for Apple, at least in the near future.
