• Apple’s manufacturing expansion in India represents a strategic supply chain supplement.
• Record $22 billion iPhone production in 2025
• India’s challenges limitations prevent it replacing China’s ecosystem, positioning it as crucial but complementary.

Apple manufacturing in India has reached unprecedented heights, but the narrative of India becoming “the next China” oversimplifies a far more nuanced strategic reality. Apple assembled US$22 billion worth of iPhones in India in the 12 months ended March, increasing production by nearly 60% over the previous year, marking a pivotal moment in global supply chain dynamics.

The transformation is remarkable by any measure. In the first half of 2025, iPhone production in India rose by 53% compared to the same timeframe in 2024, reaching nearly 23.9 million units. Exports from India surged as well, totalling US$22.56 billion, a substantial increase from US$14.71 billion the previous year.

For the first time in history, India overtook China to become the top exporter of smartphones to the US, with smartphones assembled in India accounting for 44% of US imports of those devices in the second quarter.

The geopolitical catalyst behind the shift

Apple’s accelerated pivot stems from mounting geopolitical pressures and market realities in China. Apple’s smartphone shipments in China fell 17% year-over-year, dropping from 51.8 million units in 2023 to 42.9 million in 2024.

The company’s Chinese market share has contracted dramatically, falling to 15% in China, behind Huawei’s 16% and top-ranking Vivo’s 17%. The decline isn’t merely cyclical. Local manufacturers have emerged as the primary beneficiaries, with government support through nationwide smartphone subsidy policies providing additional momentum for domestic brands.

Notably, Apple’s premium-priced iPhones were reportedly ineligible under the new subsidy scheme. The resurgence of Huawei, previously hampered by US sanctions, has particularly impacted Apple’s premium market position.

Patrick McGee, author of “Apple in China: The Capture of the World’s Greatest Company,” provides context to this shift. McGee argues that Apple is still far from withdrawing from China, having invested billions of dollars in talent and equipment in China, with the country’s authoritarian government now having more influence over Apple’s fate than any other country. His analysis reveals a fundamental dependency that extends beyond simple manufacturing.

India’s manufacturing momentum and limitations

India’s rise as an Apple manufacturing hub has been swift but faces inherent constraints. Apple and its suppliers are aiming for a significant shift in global iPhone production, with plans to assemble 32% of global output and 26% of its value in India by 2026-27. The ambitious target could see India’s iPhone production value rise beyond US$34 billion.

However, the reality on the ground reveals some challenges. India’s manufacturing ecosystem is less mature than China’s, with supply chain inefficiencies and a less experienced workforce combining to slow scalability. Indian factories still face many problems, including low iPhone yield rates (only about 50%) and hygiene issues.

Manufacturing executives acknowledge the limitations, and the infrastructure gap remains substantial. While iPhone assembly lines in China work on two 12-hour shifts, Indian labour laws force Apple supply chain partners to have three eight-hour shifts, requiring them to employ more workers.

Quality control presents another hurdle, with Apple having to reject almost half the production out of one partner in India as it failed to meet standards.

The supplement strategy: Why complete replacement isn’t feasible

The evidence suggests India serves as a strategic supplement rather than a wholesale replacement for China. While Apple has been able to build iPhones in India, it’s only a tiny percentage of its needs; it’s only final assembly processes for now, and it will take years to reach any significance in numbers. Surprisingly, many of Apple’s factories in India are Chinese subsidiaries that followed Apple to the continent.

Apple’s dependency on China extends beyond final assembly. Ten years ago, Apple relied on China primarily for final assembly, while today, Apple not only assembles devices in China, but it also sources many components from the country. This deep integration means that even Indian-assembled iPhones rely heavily on Chinese components and expertise.

The scale disparity is telling. India could reach about 15%-20% of overall iPhone production by the end of 2025, while China still accounts for the majority of Apple iPhone production. Even Apple’s most ambitious projections suggest India will handle approximately 25% of global iPhone production by 2027 – significant, but hardly a complete replacement.

Market dynamics and strategic positioning

Apple’s India strategy represents sophisticated risk management rather than abandoning China. As of late 2024, 15% of iPhones are now produced in India, up from just 5% two years prior. Its measured approach reflects practical constraints and strategic thinking.

The geopolitical environment continues to shape decisions. President Donald Trump laid out US “reciprocal tariff” rates on more than 180 countries, with China facing a 34% tariff and India pegged at 26%. However, the tariff differentials don’t eliminate the fundamental challenges of replicating China’s manufacturing ecosystem elsewhere.

Apple’s approach mirrors broader industry trends. Samsung Electronics and Motorola have also been striving to move assembly for US-bound smartphones to India, though their shift has been significantly slower and is limited in scale compared with Apple, indicating systemic challenges in scaling alternative manufacturing hubs.

The path forward: Coexistence, not replacement

The most realistic scenario involves sustained coexistence rather than replacement. The end goal for Apple is to have about half of iPhone production in India and half in China, according to industry analysis. A balance recognises the strategic necessity of diversification and the practical impossibility of complete disengagement from China.

Apple’s investment trajectory supports this interpretation. Apple announced a US$500 billion investment in US facilities and is establishing new production lines in Vietnam for AirPods, Apple Watch, and MacBook parts: a multi-hub strategy rather than a simple China-to-India migration.

The company’s approach to component sourcing reinforces this complexity. Assembly is the final stage of iPhone production, with hundreds of components sourced from China. As final assembly shifts geographically, the underlying supply chain remains integrated with Chinese manufacturers.

Conclusion: Redefining the narrative

Apple’s manufacturing shift to India represents neither the wholesale replacement of China nor a simple geographical arbitrage. Instead, it reflects a sophisticated strategy of supply chain resilience, market access optimisation, and geopolitical risk management.

The success of Apple’s diversification strategy shouldn’t be measured by India’s ability to completely replace China, but rather by its capacity to provide strategic alternatives, serve specific market demands, and contribute to overall supply chain resilience. In this context, India’s emergence as an Apple manufacturing hub represents a strategic success.

The India-China dynamic in Apple’s supply chain will likely remain complementary rather than competitive, with each region serving distinct strategic purposes in the company’s broader manufacturing ecosystem.

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