Apple to move iPhone production to India to mitigate tariffs as sales decline

USA Today

02-05-2025

Apple to move iPhone production to India to mitigate tariffs as sales decline
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Apple moving most US iphone production from China to India
Apple has a strategy for avoiding President Trump's steep tariffs on China: making more of its iPhones in India. A source told Reuters the tech giant is holding urgent talks with manufacturers Foxconn and Tata with the goal of producing most of its U.S.-bound iPhones in India by the end of 2026.
Apple AAPL.O is expected to face a string of questions over the delayed roll-out of key AI features and the impact of the Sino-U.S. tariff standoff on its business, when it reports results on Thursday.
Even as Apple benefited from a rush of orders for its recently launched lower-priced iPhone 16e in the January-March period ahead of potential tariffs, Wall Street analysts still expect the company will report a small fall in iPhone sales. That would mark a second straight quarter of declines.
The Trump administration has so far spared electronics from tariffs, but Washington has signaled that some levies could come in the coming weeks. The uncertainty has sent shares of Apple, which makes 90% of its products in China, down more than 16% this year, and wiping off over $600 billion from its market value.
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Apple will try to mitigate tariffs by shifting production of U.S.-bound iPhones to India, Reuters has reported. Analysts expect the company to spread some of the tariff costs through its supply chain, while keeping price increases to a minimum to avoid losing market share.
"Tariffs are a sword of Damocles for Apple – dangling, disruptive and politically charged," said Eric Schiffer, chairman of Patriarch Organization, a California-based private equity firm that holds Apple shares.
Unlike rivals such as Samsung 005930.KS and Alphabet's GOOGL.O Google, Apple has also been slow to roll out some important AI features it promised last year at its developer conference.
Improvements to voice assistant Siri, a common ask from users and investors, have been delayed to 2026, and Apple pulled a commercial that promoted AI functionalities that were not yet available.
AI features are especially important in China, where Apple has been losing market share to domestic rivals such as Huawei. Apple has partnered with Alibaba to offer AI services in China but hasn't offered a timeline for their roll-out.
IPhone shipments in China fell 9% in the March quarter, the only major smartphone maker to post a decline in the region, according to data from research firm IDC.
Despite these challenges, strong demand for the $599 iPhone 16e in India helped Apple take the top spot for global smartphone sales in the quarter, according to Counterpoint Research.
Apple's cautious, privacy-first approach to AI deployment has slowed its roll-out and left the company playing catch up, said Jacob Bourne, analyst at eMarketer.
"With tariffs threatening cost structures, Apple faces pressure to move faster on AI innovation and supply chain realignment - both of which are capital intensive".
Overall, Apple's revenue is expected to rise 4.2% in the January-March period, its fiscal second quarter, roughly matching the pace in the first quarter. Growth will likely be driven by upbeat iPad demand and growth in the services business.
IPad sales are expected to rise 9.1% in the second quarter, while the services business, Apple's biggest revenue generator after the iPhone, will likely grow 11.8%.
Reporting by Akash Sriram in Bengaluru; Editing by Sayantani Ghosh and Shounak Dasgupta