Apple eyeing India for iPhone production amid US tariff changes: Report

Apple Inc. is strategically increasing its iPhone production in India, responding to new 'reciprocal tariffs' unveiled by US President Donald Trump last week. These tariffs target over 180 countries, with China facing a significant 54% levy on exports to the US. As a response, Apple aims to mitigate these impacts by diversifying its production capabilities beyond China, thereby reducing the financial strain associated with these heightened tariffs, a Wall Street report stated.

India has quickly emerged as a crucial component of Apple's supply chain, currently contributing 10-15% of global iPhone assembly. This shift aligns with Apple's broader plans to augment this figure to 25% by 2025, in line with New Delhi's ambitions to enhance its status as a global manufacturing hub. The 27% tariff imposed on Indian exports to the US, while lower than China's, still presents challenges. 

Recent reports highlighted that Apple expedited shipments from India to the US before the April 5 deadline when the 10% reciprocal tariff came into effect, illustrating the urgency of Apple's strategic adjustments.

The tariff changes have significantly reshaped global trade dynamics, affecting tech companies' operational strategies. For Apple, the immediate focus is on ramping up production in India to offset increased costs from China's tariffs. This strategy supports India’s positioning as a key manufacturing partner. Meanwhile, Apple continues to lobby for tariff exemptions to maintain competitive pricing in its pivotal US market, where demand for its products remains robust.

Consumer costs are notably impacted by these tariffs. Analysts at Rosenblatt Securities project potential price hikes, estimating that high-end models could become significantly more expensive if Apple passes on the increased costs to consumers. This potential rise in prices underscores the importance of Apple's strategic production shift, aimed at maintaining price competitiveness while navigating complex tariff landscapes.

As reported earlier, senior Indian officials confirmed to The Times of India that Apple sent five planeloads of iPhones and other products from India to the United States in a span of three days during the last week of March. This rush shipment was in response to a 10% reciprocal tariff imposed by the Trump administration, which was set to be enforced on 5 April.

In an attempt to minimize the impact of the new tariffs on its finances, Apple quickly relocated its inventory from manufacturing facilities in India and China to the US, despite it being an atypically slow period for product movement. A source mentioned that factories in these locations were proactively shipping products to the US in anticipation of the higher tariffs taking effect.

Despite cost pressures, Apple is not currently planning to raise retail prices in India or globally. However, the company is evaluating the long-term impacts of tariffs on its global supply chain. In the USA, consumers are already stockpiling iPhones in anticipation of a potential price increase, as reported by Bloomberg's Mark Gurman. Apple Store employees are reportedly overwhelmed with customers panic-buying iPhones.

The US market is crucial for Apple, especially for iPhones, and the company is considering absorbing the increased costs internally rather than passing them on to consumers, at least for the time being. The changing tariff landscape may lead Apple to reexamine its manufacturing operations.