How Apple’s $6B iPhone exports from India are reshaping its China strategy

Apple Inc. has begun ramping up iPhone production in India, exporting $6 billion worth of its devices in just six months—a third more than the year before, as reported by multiple sources.

The move marks Apple’s ongoing efforts to diversify its supply chain due to tensions between the US and China.

The California-based company has sought to reduce its dependence on China by expanding manufacturing operations to other countries, including Vietnam and India.

Apple is valued at over $3 trillion in 2024, making it the second most valuable technology company in the world after Nvidia.

Since 2010, China has been Apple’s primary manufacturing hub, producing millions of iPhones each year.

In fact, more than 95% of iPhones, AirPods, Macs and iPads are made in China.

Yet, Apple’s shift to India reflects only the beginning of its efforts to restructure its supply chain.

“It’s clear that the US is implementing a very assertive policy toward China, extending these measures to private companies,” says Emre Alkin, a professor of economics and the rector of Topkapi University.

“While the US officially follows a 'One China' policy, it’s simultaneously working to reduce its dependency on China. Diplomatically, it respects China’s political unity, yet through its actions, it signals discomfort with the economic dependence on China,” he tells TRT World.

Shift in strategy

India has emerged as a potential alternative to Apple’s production strategy, aided by government incentives, a skilled workforce, and improving technological infrastructure.

Three key suppliers—Taiwan’s Foxconn Technology Group, Pegatron Corp., and India’s own Tata Electronics—are at the core of Apple's operations in southern India, where they assemble premium models like the iPhone 16 Pro and Pro Max.

Foxconn’s local facility, located near Chennai, leads production in the country, contributing to half of India’s iPhone exports.

Despite this growth, challenges remain for India in meeting the scale and infrastructure offered by China.

“It seems unlikely that India will be able to offer investors opportunities on par with China’s in the short term. We know many companies have even left India," Alkin says, highlighting India’s current limitations compared to China’s well-established infrastructure.

Beyond production, Apple seeks to diversify and localise production, by also expanding its retail footprint in India.

Following the successful launch of flagship stores in Mumbai and New Delhi last year, Apple has announced additional stores in Bengaluru and Pune.

‘Balancing act?’

Apple’s shift from China to India is not without precedent but represents a significant reallocation in its production strategy.

As US-China ties grow more strained, companies like Apple seek to mitigate risks from potential tariffs or sanctions.

Indian government subsidies and tax benefits have enabled Apple to produce high-end models like the iPhone 16 Pro and Pro Max competitively, while Prime Minister Modi’s “Make in India” initiative has further strengthened India’s position as a manufacturing option, though the country’s infrastructure is still developing

According to the Los Angeles Weekly Times, Apple’s iPhone exports from India are now estimated to surpass $10 billion in value by the end of fiscal 2024.​

Foxconn, Apple’s top supplier in India, has a plant on the outskirts of Chennai, producing around half of the iPhones assembled in the country.

Tata Electronics, which acquired an iPhone assembly unit from Wistron Corp. last year, has also played a significant role, contributing roughly $1.7 billion in iPhone exports in the past six months​.

Bloomberg reports that in the fiscal year ending March 2024, Apple doubled its production in India to $14 billion, with about $10 billion of that amount being exported​.

Apple’s annual revenue from India reached a record $8 billion in the year through March, driven by a mix of expanding manufacturing and a growing retail presence​.

Though Apple’s share of the smartphone market in India remains below 7%, it is making strategic investments to gain a larger foothold.

New stores, combined with targeted marketing and affordable financing options, are all part of Apple’s plan to gain a competitive edge over established players like Xiaomi, Oppo, and Vivo.

Yet, as Alkin observes, although the US is incentivising businesses to pivot away from China, this shift has not affected China’s overwhelming presence in AI technology.

“China holds 61% of global AI patents. The U.S. has fallen far behind and is now attempting to close the gap by influencing international standards and putting pressure on independent organisations,” he states.

How important is China for Apple?

However, despite the rapid expansion in India, according to the graphics Apple continues to rely on China for a significant portion of its supply chain.

Apple still sources many components from China and the country remains critical to its global production network.

As Alkin mentions, India is unlikely to fully replace China in the near term, especially given the ongoing race for technological dominance.

While Apple continues expanding in India, it remains deeply reliant on Chinese suppliers for core components and infrastructure.

“The trend is not in America’s favour, and companies moving from China to India won’t alter this trajectory," he says by pointing out the enduring challenges facing US tech companies as they attempt to rebalance their supply chains.