An increasing number of multinational corporations are shifting their production lines out of China, with India emerging as a major beneficiary. Analysts believe that Apple’s decision to manufacture the new iPhone 16 series in India signifies a significant shift in its supply chain diversification strategy amid geopolitical challenges.
Apple has traditionally produced all high-end iPhones in China, while Indian manufacturers mainly handle low-end and older versions of iPhones.
A report by the South China Morning Post on September 12 revealed that while Apple continues to produce phones in China, it is also ramping up production of the latest iPhone series in India, including the high-end Pro models.
Analysts suggest that as tensions between the U.S. and China escalate, this move may be part of Apple’s efforts to enhance flexibility in its supply chain outside of China, demonstrating increased confidence in India’s high-tech manufacturing capabilities.
Apple began assembling iPhones in India in 2017, and production volumes have been steadily increasing in recent years. Supply chain data indicates that India assembled around 30 million iPhones last year, and in just the first half of 2024, approximately 18 million units were produced, with projections to manufacture 23% of total iPhones by the end of 2025. These devices are not only targeted for the Indian market but are also exported to the U.S.
Karthik Nachiappan, a researcher at the South Asian Studies Institute at the National University of Singapore, told the South China Morning Post, “These moves reflect a broader shift, with major tech companies like Apple, Microsoft, Amazon, among others, relocating manufacturing out of China for various security and economic risk considerations.”
He added, “India occupies a prime position in supporting this shift and has been implementing a series of policies, incentives, and subsidies to achieve this goal.”
In these efforts, India’s production-linked incentive program is crucial, providing subsidies to tech hardware companies, including Apple supplier Foxconn Technology Group, to boost domestic manufacturing in India.
Sanyam Chaurasia, a senior analyst at Canalys, noted, “With the production of the Pro series in India, it is clear that Apple’s manufacturing capabilities are becoming more efficient in India.”
In June last year, Apple’s CEO Tim Cook and other tech executives met with Indian Prime Minister Narendra Modi in Washington, emphasizing that India represents “tremendous opportunities.”
Last Tuesday, U.S. electronic component manufacturer Jabil announced a $238 million investment to establish a manufacturing plant in Tamil Nadu, southern India. Jabil will join the ranks of Apple suppliers like Foxconn and Pegatron, who have already set up facilities in Tamil Nadu.
Nachiappan stated that expanding production bases is a “rational” move for American companies like Apple, particularly considering the tense post-election climate. “Given this reality, it’s best to start preparing and keep moving forward.”
Gene Munster, managing partner at Deepwater Asset Management, previously mentioned on CNBC that Cook is laying the foundation for Apple to have a larger scale in India than in China.
Apple’s strategy in India not only revolves around product sales but also aims to establish India as a significant manufacturing hub to reduce dependency on China.
However, experts point out that as Apple continues to expand in India, challenges lie ahead. Chaurasia highlighted that a key issue is the slow process of training skilled labor, especially as equipment design becomes more complex.
Nachiappan emphasized that Apple and its main supplier Foxconn must establish a more sustainable and viable supply chain to increase production, which will involve prioritizing the enhancement of labor skills.