Apple and India battle time and geography in iPhone production shift

Hindustan Times

29-04-2025

There are reports that Apple intends to shift manufacturing of all US-bound iPhones, from China to India. That means, around 60 million more iPhones may be made in India, destined specifically for the US — this, in addition to iPhones already made here for domestic consumption, and exports. If Apple's manufacturing partners in India are able to pull this off, it'll be nothing short of a coup, say analysts.
There are three distinct yet overlapping pieces that need to come together. The current iPhone manufacturing capacity in India with headroom for increasing local consumption and exports; investments lined-up by Apple and its partners Foxconn as well as Tata Electronics to add more production capacity; and sourcing of raw materials for which any production facility still largely relies on China.
Apple has not confirmed, or denied, these conversations.
A larger share of the pie
India's manufacturing share of iPhones, depending on estimates, ranged between 10% to 20% at the end of 2024. Apple's global iPhone shipments for the year were 232.1 million. Apple does not release country-specific manufacturing data.
'Our estimations are that in 2024, the production levels of iPhones in India was around 43 million units. They export around 32 million out of this, and the rest are sold in India,' points out Navkendar Singh, analyst with International Data Corporation (IDC) Asia Pacific.
While India has been assembling iPhones in India since 2017, and annually increasing that capacity, it was last year when the iPhone 16 Pro and iPhone 16 Pro Max marked a beginning of the 'Pro' iPhone manufacturing in the country.
That played its part in bucking the trend of generational inflation that is common with annual smartphone upgrade cycles — the fact that iPhone 16 Pro phones cost lesser than their predecessors, forced Android phone makers including Samsung and OnePlus to implement pricing corrections on their flagship phones.
'The projections for 2025 indicate a rise to 26-28% share, underscoring India's increasing role in Apple's global supply chain,' says Prabhu Ram, Vice President - Industry Research Group, at CyberMedia Research (CMR).
iPhone manufacturing in India, starting with the low-cost iPhone SE, scaled quickly with three partners, Foxconn, Wistron and Pegatron in the early years. The big boost was provided by the government of India's Production-Linked Incentive (PLI) scheme.
Currently, Foxconn produces more than 60% of all iPhones being put together in India, and has dialled up investments in recent years — this includes a $1.5 billion investment in expanding the plant near Chennai, and the company is believed to be working on a new facility near Noida. Foxconn did not respond to HT's requests for comment.
Tata Electronics, which acquired Wistron, and has a majority stake in Pegatron's Tamil Nadu facility, is also investing towards capacity expansion.
These investments will be crucial to creating room for the big shift from China, in the coming years.
Tata Electronics declined a comment on any possible realignment of iPhone production between China and India.
Providing a backdrop to Apple's new thrust is the ₹76,000 crore India Semiconductor Mission, although it will take some time for the chips powering iPhones to be made locally.
In the fiscal year ending March 2025, Apple is estimated to have produced $22 billion worth of iPhones in India, a 60% increase, over a year prior.
Where do we go from here? 'Even with best efforts, I don't see Apple manufacturing more than 50 million iPhones a year in India, out of which 20-25% will be consumed domestically and rest exported to other countries,' says Faisal Kawoosa, Chief Analyst and co-founder of Techarc.
IDC's Singh expects India's iPhone consumption to increase from present 11 million units, to around 20 million, in coming years.
A big, complicated shift?
Still, while analysts believe its debatable whether a complete replication and replacement of production of US-bound iPhones from China to India is possible, they agree that a significant shift is very much on the anvil.
'In 2024, roughly one in four iPhones globally available was shipped to North America (NAM) which includes US and Canada,' notes Abhilash Kumar, Industry Analyst at TechInsights, a research firm.
Kumar believes that India's iPhone production capacity will likely double in 2025, but even then, will not be enough to meet the Indian as well as US demand. Things could change next year, though.
IDC's Singh notes that factoring in an upward trajectory of India's iPhone demand, ' Apple and their partners will need capacity to produce 20 million plus 60 million iPhones in India to meet all the demand for India plus for the US.'
'Theoretically the shift is possible, but in reality it might not be feasible. Our manufacturing is an extension of Chinese manufacturing ecosystem and we rely on components from China,' notes Techarc's Kawoosa.
'We estimate that scaling up iPhone production in India would entail investments upwards of $200 million by Apple and its partners over next couple of years. Eventually, it might need to go up to $500 million,' Kawoosa estimates, adding that China's stranglehold on the component ecosystem, gives it leverage.
'I feel China might already be hunting for strategic potential partners, like Middle Eastern countries, who they could work with to bypass the reciprocal tariffs,' he adds.
Pieces of the puzzle
Sourcing of components, and an overwhelming reliance on China, leaves little in terms of flexibility for tech companies such as Apple, and their production partners.
CMR's Ram says it is crucial to recognise deep interdependencies within the supply chain. 'With China still serving as a critical source for key components and raw materials, any supply chain disruptions or new tariffs on Chinese parts could still impact iPhone production timelines and costs,' he says.
Timelines being indicated (end-2026 is one that has appeared in reports) for Apple's intent to shift production from China to India, is something IDC's Singh disagrees with.
'I believe the 18-month timeline is slightly premature. The 80 million target can happen in two and a half or three years but that's also going to be tricky. Especially the fact that we know from our sources that whenever production lines have to be expanded and precision machines are set up, those engineers still come from China.'
'India's manufacturing chains or Apple's dependency on high value components, screens, processors etc. everything from China and Taiwan, will remain for a foreseeable future,' says Singh. He explains that a semiconductor facility itself has a timeline as long as 15 years, and even then, they may begin initially with larger 10-nanometer architecture chips.
The present generation A18 Pro chip used in iPhones is a second-generation 3-nanometer process (TSMC N3E, to be precise), with specific focus on performance per watt metrics, as well as artificial intelligence (AI) processing. It will take time for India to start making these.
Importantly, iPhone manufacturing facilities follow a standard template anywhere in the world, including precise robotic assembly lines and testing equipment, stringent quality control, as well as significant capital investment for training as well as skilling the workforce.
This is something Apple CEO Tim Cook alluded to recently, when he noted that the manufacturing reliance on China is not due to costs, but due to availability of skilled labour and advanced tooling.
'For China, an immediate priority will be to secure a favourable trade agreement with the US,' says CMR's Ram.
And for India, it will be to scale up its current production rapidly.