Apple has upped the number of flights transporting iPhone shipments from India to the US in response to Donald Trump’s tariff escalation, as the tech giant grapples with a significant threat to its business.
Since Trump’s announcement, at least 10 flights have departed from Chennai International Airport, according to three Indian officials familiar with the situation.
Apple is focusing on strengthening its ties with India to offset the immediate impact of the US President’s aggressive tariffs on China. Despite failing to secure a last-minute exemption from Washington’s 104% levy on China, Apple is considering further investments in India, according to two Indian officials. “Apple is definitely exploring more opportunities in India,” one official mentioned. Apple declined to provide a comment.
Apple has been among the hardest-hit by Trump’s tariff threats, losing approximately $700 billion in market value since the recent announcements. This highlights the challenge the company faces as it has heavily relied on advanced manufacturing in China.
By reserving India’s entire iPhone production for the US, Apple could cover around 30 million of the 50 million iPhones it ships to the US annually, as per Bank of America analyst Wamsi Mohan.
Mohan stated, “I believe they have taken steps to mitigate some of the immediate impact, but it’s not a sustainable solution in the long run.” Apple has been slowly expanding its operations in India, especially since the disruptions caused by the pandemic in China. However, the majority of its smartphone manufacturing still takes place in China, as per Counterpoint Research.
Recently, MK Stalin, the chief minister of Tamil Nadu, where four of India’s five iPhone plants are located, met with Andy Priestley from Jabil, a key Apple supplier. Jabil had previously announced plans to expand its facility in Tamil Nadu. Although Jabil has not publicly confirmed supplying Apple in India, Stalin mentioned that the meeting focused on “new business investments in Tamil Nadu.”
While India faces reciprocal tariffs from Trump, the country is engaging in talks for a bilateral trade agreement that could potentially reduce the tariff burden. Additionally, India is expected to benefit from Trump’s decision to pause additional tariffs on countries willing to negotiate with the US.
After Trump’s announcement on his Truth Social platform, Apple’s shares saw a significant increase. The US President hinted at the possibility of exempting certain companies from reciprocal tariffs, stating, “We’re going to take a look at it.”
Despite Apple’s current reliance on India, the company lacks a robust supply chain in the country to significantly boost manufacturing. This leaves Apple vulnerable to substantial tariffs in the long run, forcing the company to either raise prices on its high-end electronics or absorb the additional costs.
Analysts predict that any price hikes by Apple may occur later in the year, potentially coinciding with the launch of the new iPhone in September. These price increases are likely to be implemented globally to distribute the impact of US tariffs across consumers worldwide. Apple could also exert pressure on its suppliers to pass on some of the tariff impacts.
One of Apple’s major concerns is navigating Trump’s push for “made in America” iPhones. The administration believes Apple can shift iPhone manufacturing to the US, but experts argue that this would be costly and impractical given Apple’s deep-rooted ties with China.
White House press secretary Karoline Leavitt and commerce secretary Howard Lutnick have expressed optimism about Apple’s potential to manufacture iPhones in the US. However, analysts estimate that it could cost Apple billions of dollars and several years to move even a fraction of its supply chain from Asia to the US.
Despite Apple’s commitment to hiring 20,000 staff as part of a $500 billion US spending plan over the next four years, the company’s reliance on Asia-based manufacturers remains a significant challenge.
iPhone assembly is predominantly carried out in mainland China by companies like Taiwan’s Foxconn and Pegatron, with some assembly also taking place in India. This process involves assembling the 387 individual parts that make up an iPhone 16, including chips, circuit boards, batteries, wires, lenses, screens, and various metal and plastic components.
Apple’s supplier list for the 2023 fiscal year includes 187 companies responsible for 98% of the company’s direct spend. The majority of these companies have manufacturing operations in mainland China and Taiwan.
Despite the feasibility of assembling iPhones in the US, challenges remain due to the components being sourced from Asia. Analysts suggest that tariffs on these components could pose significant obstacles.
Following discussions with Luxshare executives, it was confirmed that moving iPhone assembly to the US is impractical as it would still rely on Asian components subject to tariffs, according to Bernstein analysts.