Apple aims to boost iPhone production in India to nearly $40 billion by FY26, with CEO Tim Cook revealing most US sales will now come from there. This move reflects Apple's strategic shift away from China amid rising tensions and trade tariffs.
Apple is facing negative influence due to high tariffs and geopolitical tensions affecting their production in China.
Apple's Production Shift: Apple aims to scale iPhone production in India to nearly $40 billion (Rs 3,36,000 crore) by FY26. This move aligns with its strategy to diversify away from China due to geopolitical tensions and trade tariffs.
Strategic Pivot Revealed: During Q2 2025 earnings call, Apple CEO Tim Cook confirmed that most iPhones sold in the US during the April-June quarter would be manufactured in India. He emphasized that this shift is driven by reciprocal tariffs reshaping production strategies.
Market Demand Fulfillment: The initiative will enable Apple to meet 80% of its iPhone demand in the US and fully cater to India’s growing domestic market, positioning India as a critical manufacturing hub.
Impact of Tariffs: Apple anticipates a $900 million impact from US tariffs in the current quarter. However, Cook noted uncertainty about long-term implications due to potential future actions.
Vietnam's Role Expansion: While China remains the origin for most Apple products sold outside the US, Vietnam is emerging as another key manufacturing hub, particularly for iPads, Macs, Apple Watches, and AirPods sold in the US.
India’s Electronics Boom: India’s electronics manufacturing sector is booming under its production-linked incentive (PLI) scheme. In FY25, smartphones became India’s top export category, reaching a record Rs 2 lakh crore in value.
Apple's Dominance in Exports: Apple contributed significantly to this boom, with iPhones making up nearly 70% of total smartphone shipments from India.
Retail Expansion in India: Apple plans to open more retail stores in India later in FY25, building on its current two operational stores. This expansion reflects the company’s growing confidence in India’s market potential.
Strong Sales Momentum: The company set a quarterly sales record in India and reported strong momentum across products and services, underscoring its strategic focus on this market.
Long-Term Strategic Considerations: Apple's shift to India and Vietnam highlights its efforts to mitigate risks associated with over-reliance on any single manufacturing base, ensuring supply chain resilience.