Apple Inc. (AAPL) Stock: Inside the Race to Shift iPhone Production from China to India

TLDR

Apple aims to import most US-bound iPhones from India by end of 2026 Production in India needs to double to meet this goal (currently 20% of iPhones) Trump administration exempted smartphones from reciprocal tariffs, but China tariffs remain a concern Apple assembled $22 billion worth of iPhones in India last fiscal year, a 60% increase Q2 FY’25 earnings expected in early May with projected EPS of $1.61, up from $1.53 year-over-year

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Apple is rapidly accelerating its manufacturing shift from China to India, with plans to import most US-bound iPhones from India by the end of 2026. This strategic move comes as the tech giant seeks to reduce risks related to tariffs and ongoing geopolitical tensions between the United States and China.

Apple Inc. (AAPL)

The company will need to roughly double its current iPhone production in India to achieve this goal. Apple currently sells more than 60 million iPhones annually in the US market.

This plan represents the latest development in Apple’s pivot away from China, a process that began during severe COVID-19 lockdowns that disrupted production at its largest manufacturing facilities. The shift has gained momentum due to tariffs introduced by US President Donald Trump and increasing tensions between Beijing and Washington.

India’s Growing Manufacturing Role

Apple assembled approximately $22 billion worth of iPhones in India during the 12 months ending March 2025, representing nearly a 60% increase over the previous year. Currently, one in five iPhones (20%) are made in India, though China remains Apple’s primary production base.

The bulk of India-made iPhones come from Foxconn Technology Group’s factory in southern India. Tata Group’s electronics manufacturing arm, which acquired Wistron Corp.’s local business and manages Pegatron Corp.’s operations in India, also serves as a key supplier.

India exported 1.5 trillion rupees ($17.5 billion) in iPhones during the fiscal year through March 2025, according to the nation’s technology minister.

Shipments of iPhones from India to the US increased after Trump announced plans for “reciprocal” tariffs in February. Apple’s average India production and exports grew throughout the fiscal year ending in March.

Tariff Situation Remains Complex

The Trump administration recently exempted electronics goods including smartphones and computers from its reciprocal tariffs. While this benefits companies like Apple, the exemption doesn’t appear to extend to Trump’s separate 20% duty on China, which was implemented to pressure Beijing on fentanyl issues.

This means iPhones made in India won’t face duties for now. But excluding the exceptions made on April 11, Trump’s total levies on China remain at 145%, likely forcing companies like Apple to speed up their supply chain diversification.

Apple now assembles its entire iPhone range in India, including the premium titanium Pro models. The company’s manufacturing success in India has been supported by state subsidies tied to Prime Minister Narendra Modi’s goal of transforming the country into a manufacturing hub.

Upcoming Earnings Under Scrutiny

Apple is expected to report its Q2 FY’25 earnings in early May. Analysts project earnings per share to reach about $1.61, a slight increase from $1.53 in the year-ago quarter. This growth is likely to be driven by higher services revenues and ongoing share repurchases.

However, investors will be closely watching Apple’s outlook given the Trump Administration’s tariff policies and the intensifying trade tensions between the United States and China.

US tariffs on China currently stand at approximately 245% on some imports. While electronics including smartphones and laptops are currently exempt, Trump has indicated this reprieve might be temporary. This could pose a major challenge for Apple, which reportedly produces about 9 out of 10 of its iPhones in China.

The market will be looking for clarity on how Apple plans to manage its supply chain and US business amid these developments. Some analysts have estimated that in a worst-case scenario, Apple’s earnings could decline by as much as 30% due to tariffs.

Apple currently has a market capitalization of $2.9 trillion. The company reported revenue of $396 billion over the last twelve months, with operating profits of $126 billion and net income of $96 billion.

Looking at Apple’s earnings history, the company has shown positive one-day post-earnings returns about 40% of the time over the past five years. This percentage increases to 50% when considering data for just the last three years.

The median positive one-day return was 5.3%, while the median negative one-day return was -1.5%.

As Apple continues its strategic shift toward India manufacturing, the company appears positioned to weather potential tariff storms, though challenges remain in fully diversifying its supply chain away from China in the short term.

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