The curious case of iPhones: Why a small gadget in your pocket is making US & China insecure about India

Economic Times

8 hours ago

TIL Creatives Representative Image
As over 300 Chinese engineers prepares their bags to leave Foxconn's iPhone plants in southern India this week, Beijing is quietly watching. For China, Apple's big bet on India is more than just a factory shift, it's a direct threat to its image of being the world's factory. At the same time, from across the Pacific, earlier this year, US President Donald Trump had a 'little problem' with Apple too. 'We are treating you really good, we put up with all the plants you built in China for years,' Trump said in May. 'We are not interested in you building in India.' He wanted Apple to bring those jobs back to American soil.Two economies, both far bigger than India's, now appeared to be bothered with the same worry: what happens if India really does become Apple's new favourite factory floor? The US and China both see risk in Apple's supply chain pivot. For America, it challenges efforts to bring jobs home. For China, it threatens its stronghold on global high-tech manufacturing.
Earlier this year, Foxconn, Apple's long-time assembler, had pressed ahead with a $1.5 billion display module plant near Chennai. The unit was slated to make the part under an iPhone's glass screen that controls touch and display quality.Tamil Nadu's state government had approved the plan last October. Indian officials had expect it to add about 14,000 jobs, a tidy boost for India's growing electronics base.But behind the scenes, China is now quietly tightening the screws. Bloomberg revealed yesterday that more than 300 skilled Chinese engineers who taught Indian workers how to run precision assembly lines have been asked by Foxconn to leave India. No official reason, just a quiet exit. The impact is anything but silent.
These technicians brought decades of process know-how from Shenzhen's vast factories. Without them, Foxconn expansion plans in India may not go as smooth as it would have liked.The US, too, is not exactly cheering India's gain. When Trump launched his first China trade war in 2018, companies scrambled to find new bases. India was slow to catch up then. Now, as China battles rising costs, with new tariffs being imposed every other month, India has never looked more attractive for Apple.Yet Trump's 'America First' pitch was brought to the forefront as he sought to charge exorbitant tariffs on every nation that sought to export to Americans. He insisted that Apple must also 'make in America.' For Apple, that's far from easy. US wages are high. Large-scale electronics assembly needs armies of trained workers. Those don't appear overnight.So Apple chose to stick with its India plan. In May, officials told FT that by the end of next year, Apple aims to make all 60 million iPhones sold in the US in Indian plants. In 2024, India already produced 18% of global iPhone output. Counterpoint Research expects this share to reach 32% in 2025. During March-May, Foxconn exported iPhones worth $3.2 billion from India, with an average 97% shipped to the US, Reuters reported on June 13, citing customs data. India iPhone shipments by Foxconn to the United States in May 2025 were worth nearly $1 billion, the second-highest ever after the record $1.3 billion worth of devices shipped in March, the data showed.Meanwhile, Beijing has more to lose than just iPhone lines. It fears losing its edge in EV batteries, solar panels and key rare earth exports. Already this year, China has delayed shipments of specialised machinery to India and Vietnam. Now, ironically, that same tariff wall has cracked China's supply dominance—and opened the door for India.
US tariffs on Chinese goods run as high as 145%, while most Indian goods face only 10%. Exemptions on key electronics like iPhones give India an edge in US. For Washington, this creates a dilemma: keep punishing China, or watch supply chains drift to India instead of coming home. Former Foreign Secretary Vijay Gokhale summed up the mood: China sees India's manufacturing rise as 'a direct threat, not just a parallel development.' India's phone surge didn't happen by accident. Foxconn, Tata Electronics, Corning, big names are pouring billions into Indian supply lines. FT reported Corning will soon start making Apple's scratchproof glass in Tamil Nadu.India's own officials know what's at stake. 'We are looking at building the entire value chain in India itself,' said Ekroop Caur, secretary for electronics in Karnataka. The aim: not just assemble phones, but design and supply every vital piece.This isn't just a trade story. The way screws, screens and circuit boards move around the world now shapes how countries negotiate, from trade talks to climate pacts and military alliances.Beijing knows that whoever controls the factories holds the upper hand. When COVID lockdowns froze huge parts of China's manufacturing heartland, companies from California to Berlin realised the risk of putting too many eggs in one basket. According to a Wall Street Journal analysis, the shutdowns cost global electronics makers billions in missed shipments and forced Apple to rethink its near-total dependence on China.Apple's push into India is one answer to that risk. But China has other tools. By restricting exports of critical raw materials, like rare earth metals used in iPhones, wind turbines and guided missiles, Beijing reminds the world that supply chains can double as economic weapons. Just last year, China tightened controls on gallium and germanium exports, minerals vital for semiconductors and defence tech, Reuters reported.This tactic isn't new. Back in 2010, China briefly cut off rare earth supplies to Japan during a territorial dispute, crippling factories until Tokyo relented. Now, with the US and Europe pushing to 'de-risk' their dependence, China's leaders are signalling they can still squeeze the tap when needed.The clamp on Foxconn's engineers in India fits the same playbook. A senior Indian official, speaking to Bloomberg, confirmed that Chinese authorities are informally blocking export of key equipment and skilled workers to India's iPhone lines. No official reason. But the signal is clear, China wants to slow any rival that could dilute its manufacturing edge.These moves ripple far beyond trade. European leaders have linked secure supply chains to climate goals, arguing that building green tech like EV batteries and solar panels depends on stable flows of materials and parts. As reported by the Indian Express, India's Foreign Minister S. Jaishankar summed it up in June: 'The upending of global trade has focused our own minds on the need for correcting what I would call a certain skewed nature of our openness to the global economy.'China's talent clamp is the latest warning shot. By slowing India's learning curve, Beijing hopes to buy time. But India's window is open. There is no national election for a year. Global companies want out of China's grip. US tariffs slam China far harder than India.So the moment is now. India's share of global phone exports has jumped from $250 million a decade ago to over $22 billion today. Most of that is Apple. The next big leap is to match China's scale.A few hundred engineers leaving might not sound big. But behind those exits sits a giant question: who controls the supply chain of tomorrow? If India cracks that code, despite the hold-ups, despite the politics, it won't just make iPhones. It will make itself impossible to ignore at the trade table. And that is what big economies fear most.In a world splitting along new lines, where supply chains double as strategic weapons, India's iPhone story shows how a gadget in your pocket can reshape who calls the shots far beyond a factory floor.