CAN APPLE REALLY SHIFT FROM CHINA?
For more than two decades, China has been the cornerstone of Apple’s global manufacturing operations. From iPhones and iPads to MacBooks, nearly every piece of Apple hardware has been assembled in vast Chinese factories known for their scale, speed, and efficiency. However, rising geopolitical tensions, particularly during the Trump administration, have placed significant pressure on this China-centric model. The former US president imposed tariffs of up to 145 per cent on Chinese goods, prompting Apple to consider diversifying its supply chain to mitigate risk. Although these tariffs are currently paused, the unpredictability of global politics has pushed Apple to explore alternative manufacturing hubs, with India emerging as a potential candidate. Apple Chief Executive Officer Tim Cook recently stated during an earnings call that most of our iPhones will be manufactured in India. This statement has been widely interpreted as a strategic pivot away from China.
Given that iPhones contribute more than 50 per cent of Apple’s total revenue, such a move carries significant implications. The company has already begun assembling iPhones in India, notably through its facilities in Chennai, and has invested heavily in local operations. These developments have led to speculation that Apple may be preparing to sever its manufacturing dependence on China. However, industry experts caution against overestimating the scope of this transition. Apple’s relationship with China is far more intricate than that of a traditional outsourcing arrangement. Since 2008, Apple has trained over 28 million workers in China. The company has invested as much as 55 billion dollars annually to develop infrastructure, enhance talent, and procure specialized machinery. When Apple sought advanced manufacturing techniques, such as high-precision aluminium casings or translucent plastics, it dispatched its top engineers to China to build these capabilities from the ground up. In comparison, India is still in the early stages of building such capabilities. While India began assembling iPhones in 2017, the total output by 2024 stands at approximately 25 million units. In contrast, China scaled from zero to 200 million units annually between 1999 and 2009. Beyond volume, the responsiveness and speed of Chinese manufacturers remain unmatched.
The core components of iPhones including chips, sensors, cameras, and displays are still predominantly manufactured in China by firms such as BYD, Luxshare, Goertek, and Wingtech. This extensive network, often referred to as the red supply chain, remains integral to Apple’s production process. As such, while India may handle final assembly, the majority of critical components and manufacturing expertise continue to originate in China. Despite these limitations, Apple is laying the groundwork for greater diversification. The company recognizes the risks of remaining overly dependent on any single geography, particularly in light of political volatility and global disruptions. Nevertheless, Apple faces a complex dilemma. A rapid withdrawal from China could provoke retaliation from Beijing, jeopardizing both its production capabilities and access to the Chinese consumer market. Conversely, a slow transition leaves the company exposed to future geopolitical shocks and supply chain disruptions. The company’s entrenchment in China is not merely logistical but deeply strategic, reflecting years of co-development, investment, and institutional knowledge that are not easily replicated. In conclusion, while Apple can technically manufacture iPhones in India, it cannot do so independently of China, at least not in the foreseeable future. The current developments represent a hedging strategy rather than a fundamental shift.
