Apple has big expansion plans for India - plans that are now being frowned upon by US President Donald Trump . Currently, Apple does not manufacture iPhones in the United States, but Trump wants that to change. Trump has made it clear to Apple CEO Tim Cook that he has a ‘problem’ with US tech giant 'building all over India’.
The majority of iPhone production occurs in China, whilst facilities in India make approximately 40 million units annually. That’s roughly 15% of Apple's total production.
Trump on Thursday revealed that he asked Apple CEO Tim Cook to stop iPhone manufacturing in India and relocate production to the United States.
Trump said, "I had a little problem with Tim Cook yesterday. I said to him, 'Tim, you're my friend. I treated you very well. You're coming in with $500 billion (investment). But now I hear you're building all over India. I don't want you building in India."
Also Read | Donald Trump warns Apple about ‘Make in India’, will Tim Cook-led iPhone maker listen?
"We are not interested in you building in India. India can take care of themselves,"Trump said he told Cook. Trump indicated that following their discussion, Apple would increase its manufacturing operations in the United States.
But how easy is it for Apple to shift production to the US? We dive in:
Tim Cook on why Apple makes in China & not US
Tim Cook had once explained why Apple manufactures its products in China and not the US. He had dismissed claims of low labour cost being the main reason, instead talking about the availability of skills.
"There's a confusion about China…the popular conception is that companies come to China because of low labour cost. I'm not sure what part of China they go to but the truth is China stopped being a low labour cost country many years ago.”
“The reason (for making in China) is because of the skill, the quantity of skill in one location, and the type of skill. We require really advanced tooling and the precision that you have to have in tooling and working with the materials. The tooling skill is very deep in China,” he had explained.
“In the US you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China you could fill multiple football fields. That vocational expertise is very deep in China,” he had said.
Can Apple make iPhones in the US?
The biggest obstacles that could prevent Apple from moving its manufacturing to the United States stem from the intricate supply network established in China since the 1990s.
Neil Shah, Vice President of Research, Counterpoint Research believes it’s easier said than done. “Every government would like to bring manufacturing locally to their country. However, Apple has more than 1,000 components going into an iPhone, and it took almost a decade for Apple to build such a complex and high-quality supply chain. And, it has been more than five years in India for Apple to reach some form of capacity, and still far away from building a well-oiled supply chain like China,” he says.
“If not China for US-bound iPhones, then India remains the only potential manufacturing destination for Apple as the ecosystem is mushrooming, aided by lower-cost English-speaking skilled labour, world-class software talent, favourable government policies such as PLI, and a huge domestic consumption market,” he adds.
Also Read | Donald Trump says India has offered a trade deal with ‘literally no tariffs’
Constructing new facilities in the US would require substantial time and financial investment, potentially reaching billions of dollars. Additionally, the economic implications could lead to a threefold increase in iPhone prices, potentially jeopardising the sales of their flagship device, feel experts.
In February this year, Apple attempted to placate Trump by revealing its intentions to invest $500 billion and create 20,000 jobs in the United States by 2028. However, these commitments did not include any provisions for domestic iPhone production.
Industry analysts indicate that iPhone costs would triple to $3,000 per unit if manufacturing shifts from India to the United States, compared to the current price point of $1,000.
MCCIA Director General, Prashant Girbane said, "A lot better thought would prevail both in the Apple company and the US administration. They would realise the following facts. First, if they decide to manufacture in the USA as compared to China, India, or Vietnam, a USD 1,000 iPhone would cost USD 3,000. Are American consumers willing to pay USD 3,000 for that iPhone?"
He added, "The manufacturing and jobs are not moving away from the USA to India, they are moving from China to India so that they would have a diversified supply chain, and American companies and consumers are protected right from the hegemony of one country that is not most friendly with them in terms of trade."
Also Read | Advantage or disadvantage? How the US-China trade deal will likely impact India - explained
Apple’s India plans
Until recently, rattled by Trump’s trade barriers on China, Tim Cook had identified India as the primary source for iPhone deliveries to the US market. "For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin," Cook stated during the company's quarterly earnings discussion on May 2.
However, following the trade agreement between the US and China regarding tariffs, Apple is reassessing its ambitious expansion strategy for India. Sources told TOI that whilst "regular expansion and China+1 production diversification plans will continue as envisaged", the company's iPhone manufacturing plans specifically aimed at the US market are now "temporarily put under review".
A source informed TOI, "We await clarity on the geopolitical situation and the tariffs. Things have been moving at a fast pace, and there have been many sudden changes to the US govt's stance on tariffs, including with regards to China where duty has been reduced drastically over the past few days. We will take a breather before embarking on any mega production expansion plans in India with regards to exclusive supplies to the US."
In light of Trump's recent statements against making iPhones in India , government officials confirmed that Apple has reaffirmed its commitment to continue investments in India via its manufacturing collaborators Foxconn and the Tata group.
"Apple has said that there will be 'no let up' in the regular investment plans that began in the post-Covid period after the introduction of the production-linked incentive (PLI) scheme for smartphones. The China+1 diversification will continue. Only the exclusive US supplies are under review,” government officials said.
The Apple manufacturing network in India stands as a significant employment generator, reportedly providing jobs to approximately two lakh individuals across various supplier companies throughout the country.
Also Read | Dealing with Trump’s tariffs: Apple exports 97.6% of iPhones to US from India to preempt higher tariffs on imports from China
What’s the road ahead?
It’s important to note that during his first presidential term, Trump attempted to persuade Apple to relocate iPhone manufacturing to American soil, but his efforts proved unsuccessful. His administration had ultimately decided to exclude iPhones from the Chinese tariffs that were implemented during that period.
Neil Shah of Counterpoint Research is of the view that Trump’s remarks may actually be a negotiating tactic amidst the ongoing India-US trade deal talks.
“Reading between the lines, the US's request to Apple could also be a way to gain leverage against India in negotiations, as they understand India needs 'halo’ companies such as Apple to attract and develop a robust domestic supplier ecosystem. So, this statement won't affect Apple's plans, which are already in motion with India in the driver's seat as a potential alternative destination to China,” he said.
The majority of iPhone production occurs in China, whilst facilities in India make approximately 40 million units annually. That’s roughly 15% of Apple's total production.
Trump on Thursday revealed that he asked Apple CEO Tim Cook to stop iPhone manufacturing in India and relocate production to the United States.
Trump said, "I had a little problem with Tim Cook yesterday. I said to him, 'Tim, you're my friend. I treated you very well. You're coming in with $500 billion (investment). But now I hear you're building all over India. I don't want you building in India."
Also Read | Donald Trump warns Apple about ‘Make in India’, will Tim Cook-led iPhone maker listen?
"We are not interested in you building in India. India can take care of themselves,"Trump said he told Cook. Trump indicated that following their discussion, Apple would increase its manufacturing operations in the United States.
But how easy is it for Apple to shift production to the US? We dive in:
Tim Cook on why Apple makes in China & not US
Tim Cook had once explained why Apple manufactures its products in China and not the US. He had dismissed claims of low labour cost being the main reason, instead talking about the availability of skills.
"There's a confusion about China…the popular conception is that companies come to China because of low labour cost. I'm not sure what part of China they go to but the truth is China stopped being a low labour cost country many years ago.”
“The reason (for making in China) is because of the skill, the quantity of skill in one location, and the type of skill. We require really advanced tooling and the precision that you have to have in tooling and working with the materials. The tooling skill is very deep in China,” he had explained.
“In the US you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China you could fill multiple football fields. That vocational expertise is very deep in China,” he had said.
Can Apple make iPhones in the US?
The biggest obstacles that could prevent Apple from moving its manufacturing to the United States stem from the intricate supply network established in China since the 1990s.
Neil Shah, Vice President of Research, Counterpoint Research believes it’s easier said than done. “Every government would like to bring manufacturing locally to their country. However, Apple has more than 1,000 components going into an iPhone, and it took almost a decade for Apple to build such a complex and high-quality supply chain. And, it has been more than five years in India for Apple to reach some form of capacity, and still far away from building a well-oiled supply chain like China,” he says.
“If not China for US-bound iPhones, then India remains the only potential manufacturing destination for Apple as the ecosystem is mushrooming, aided by lower-cost English-speaking skilled labour, world-class software talent, favourable government policies such as PLI, and a huge domestic consumption market,” he adds.
Also Read | Donald Trump says India has offered a trade deal with ‘literally no tariffs’
Constructing new facilities in the US would require substantial time and financial investment, potentially reaching billions of dollars. Additionally, the economic implications could lead to a threefold increase in iPhone prices, potentially jeopardising the sales of their flagship device, feel experts.
In February this year, Apple attempted to placate Trump by revealing its intentions to invest $500 billion and create 20,000 jobs in the United States by 2028. However, these commitments did not include any provisions for domestic iPhone production.
Industry analysts indicate that iPhone costs would triple to $3,000 per unit if manufacturing shifts from India to the United States, compared to the current price point of $1,000.
MCCIA Director General, Prashant Girbane said, "A lot better thought would prevail both in the Apple company and the US administration. They would realise the following facts. First, if they decide to manufacture in the USA as compared to China, India, or Vietnam, a USD 1,000 iPhone would cost USD 3,000. Are American consumers willing to pay USD 3,000 for that iPhone?"
He added, "The manufacturing and jobs are not moving away from the USA to India, they are moving from China to India so that they would have a diversified supply chain, and American companies and consumers are protected right from the hegemony of one country that is not most friendly with them in terms of trade."
Also Read | Advantage or disadvantage? How the US-China trade deal will likely impact India - explained
Apple’s India plans
Until recently, rattled by Trump’s trade barriers on China, Tim Cook had identified India as the primary source for iPhone deliveries to the US market. "For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin," Cook stated during the company's quarterly earnings discussion on May 2.
However, following the trade agreement between the US and China regarding tariffs, Apple is reassessing its ambitious expansion strategy for India. Sources told TOI that whilst "regular expansion and China+1 production diversification plans will continue as envisaged", the company's iPhone manufacturing plans specifically aimed at the US market are now "temporarily put under review".
A source informed TOI, "We await clarity on the geopolitical situation and the tariffs. Things have been moving at a fast pace, and there have been many sudden changes to the US govt's stance on tariffs, including with regards to China where duty has been reduced drastically over the past few days. We will take a breather before embarking on any mega production expansion plans in India with regards to exclusive supplies to the US."
In light of Trump's recent statements against making iPhones in India , government officials confirmed that Apple has reaffirmed its commitment to continue investments in India via its manufacturing collaborators Foxconn and the Tata group.
"Apple has said that there will be 'no let up' in the regular investment plans that began in the post-Covid period after the introduction of the production-linked incentive (PLI) scheme for smartphones. The China+1 diversification will continue. Only the exclusive US supplies are under review,” government officials said.
The Apple manufacturing network in India stands as a significant employment generator, reportedly providing jobs to approximately two lakh individuals across various supplier companies throughout the country.
Also Read | Dealing with Trump’s tariffs: Apple exports 97.6% of iPhones to US from India to preempt higher tariffs on imports from China
What’s the road ahead?
It’s important to note that during his first presidential term, Trump attempted to persuade Apple to relocate iPhone manufacturing to American soil, but his efforts proved unsuccessful. His administration had ultimately decided to exclude iPhones from the Chinese tariffs that were implemented during that period.
Neil Shah of Counterpoint Research is of the view that Trump’s remarks may actually be a negotiating tactic amidst the ongoing India-US trade deal talks.
“Reading between the lines, the US's request to Apple could also be a way to gain leverage against India in negotiations, as they understand India needs 'halo’ companies such as Apple to attract and develop a robust domestic supplier ecosystem. So, this statement won't affect Apple's plans, which are already in motion with India in the driver's seat as a potential alternative destination to China,” he said.
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