India Becomes New Final Assembly Destination for US iPhones, But China Remains Dominant in Supply Chain

Apple's shift to assembling iPhones in India doesn't necessarily mean it has reduced its reliance on China. The depth and breadth of the supply chain remains unchanged, with 1,000 parts sourced from China before being assembled in India. The move is mainly a workaround to avoid Trump tariffs on products exported from China to the US. While the strategy has worked so far, there remains a risk of tariffs on products exported from India to the US.

Apple's recent announcement that the majority of iPhones sold in the US are now manufactured in India has sparked interest and questions about the company's supply chain strategy. While this move appears to be a response to US President Donald Trump's tariffs, it is essential to examine the broader implications for Apple and the global electronics market.

Apple has long sourced components from China, with an estimated 1,000 parts for each iPhone coming from the country. By shifting the assembly of iPhones to India, Apple has effectively sidestepped Trump's tariffs on Chinese imports. This strategy has allowed Apple to continue operating within the US market without incurring additional costs from tariffs [1].

However, the shift to India is not a complete decoupling from China. The supply chain remains deeply interconnected, with components sourced from China continuing to play a critical role in the production process. This highlights that Apple's move is primarily a tariff avoidance strategy rather than a long-term shift in manufacturing strategy [1].

The risk remains that future tariffs could be imposed on products exported from India to the US. This uncertainty could impact Apple's cost structure and potentially affect its profitability. Moreover, the Indian market's growth and Apple's expansion plans in the country could be influenced by changes in US trade policies [2].

Apple's CEO Tim Cook has acknowledged the financial impact of tariffs, estimating that the company incurred approximately $800 million in tariff-related costs during the June quarter and an additional $1.1 billion in the September quarter. These costs are likely to be passed on to consumers, potentially affecting Apple's market share and competitive positioning [3].

In conclusion, Apple's shift to assembling iPhones in India is a tactical response to US tariffs rather than a strategic pivot away from China. While this move has immediate benefits, the long-term impact on Apple's supply chain and profitability remains uncertain. Investors should closely monitor developments in US trade policy and Apple's ongoing efforts to diversify its manufacturing base.

References:
[1] https://www.bbc.co.uk/news/articles/c5ykd997kjjo
[2] https://www.scmp.com/tech/big-tech/article/3320360/apples-india-exports-emerge-unscathed-trump-tariffs?module=top_story&pgtype=homepage
[3] https://m.economictimes.com/industry/cons-products/electronics/move-over-china-iphones-for-america-now-mostly-assembled-in-india-confirms-apple-ceo-tim-cook/articleshow/123058485.cms