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Author | Zerodha Daily Briefing

Translated by | Sun Lu

Translation Reviewer | Zhang Qianhe

Editor of this issue | Yang Qian

Reviewer of this issue | Jiang Yi

Editor's Note

For a long time, Western countries have hoped that India would replace China in the global supply chain. This idea is underpinned by Western arrogance, which assumes that China's development is merely a gift from the West—multinational companies bring advanced technology and sufficient capital, cultivating manufacturing capabilities and thus bringing about development. They therefore conclude that if the same companies enter India, India could become the next China. However, the reality is as the article asks, "Can Apple really produce iPhones in India?" The formation of local production capacity is not a solo performance by multinational corporations. Whether Apple can produce in India is influenced not only by geopolitics but also by India's own institutional construction. The South Asian Research Communication has specially translated this article for your critical reference.

Image source: Internet

Can Apple Really Make Its iPhones in India?

When Trump raised tariffs on China to 145%, global trade suffered greatly—and for Apple, it was a direct blow. Although the tariffs have been suspended, the uncertainties that Trump might cause remain forever. For Apple, the tariffs are not just about increased transportation costs across the Pacific, but a direct threat to its entire manufacturing system—almost all Apple products, including iPhones, iPads, and MacBook, have been manufactured in China for a long time.

Trump's trade war caused chaos. In order to ship before the tariffs took effect, companies scrambled to respond, with freight rates surging and inventory piling up. To gain time, Apple even chartered planes to fly iPhones from its factory in Chennai, India, to the United States. But the real question is not how fast Apple can fly the phones out, but whether it can actually leave China at all? That is the deeper and more critical question.

At first glance, Apple seems to be making efforts to move out of China. At the Apple company's second-quarter earnings call in May 1, Apple CEO Tim Cook responded to Morgan Stanley representative Erik Woodring by saying, "We do expect most of the iPhones sold in the US in the second quarter to be produced in India."

It should be noted that iPhones contribute more than 50% to Apple's total revenue—a significant figure.

Image source: Apple's Annual Report

In recent years, Apple has established several factories in Chennai, India, and reports frequently mention that India is becoming the next manufacturing powerhouse.

So, is Apple really going to give up its Chinese business?

In my opinion, this is unlikely. I am not an expert, so I mainly refer to the views of Patrick McGee, former Financial Times reporter who covered Apple and author of "Apple in China." He told Rest of World, a non-profit international media outlet, that the idea of "Apple moving to India" is more of a perception than a reality. He added:

"If the box of the iPhone you buy next year says 'Made in India,' the degree to which this phone depends on the Chinese supply chain will not be lower than any iPhone you have ever bought."

There are deeper reasons behind this. In a podcast, McGee mentioned that Apple didn't just find manufacturing in China convenient—it helped build the modern manufacturing capabilities that made it convenient. He believes that "Apple trained the Chinese workforce from scratch": when Apple wanted translucent plastic, microcircuits, or color-accurate aluminum cases, China didn't have the skills to produce these products, so Apple sent its top engineers to China to teach them. He calls this skill "tacit knowledge"—knowledge that cannot be learned from textbooks but must be accumulated through practice.

Indeed, since 2008, Apple has trained over 28 million workers in China. McGee believes that this is not just outsourcing, but more like the Marshall Plan the US implemented in Europe after World War II—only the recipient is now China. Apple not only invested labor but also capital: it once invested $5.5 billion annually in China's infrastructure, talent development, and machinery.

Therefore, Apple may complete the final assembly in India. But every previous step—chips, screens, sensors, cameras—will still be mainly produced in China. Its suppliers will still primarily be Chinese companies, such as BYD, Luxshare Precision, GoerTek, and Wintek. McGee calls this the "Red Supply Chain."

If viewed from a longer-term perspective, the scale difference between China and India will become more apparent. In 1999, Apple had zero production in China. By 2009, it was producing 200 million iPhones per year in China. It took Apple ten years to achieve this goal. In contrast, India started assembling iPhones in 2017, and by 2024, its total output was only 25 million units—equivalent to one-tenth of China's capacity. Its development speed is much slower.

Moreover, the challenges are not just about scale but also about speed. McGee recounted in his blog a story about Apple engineers visiting a Chinese factory that needed a complete machine overhaul. They originally expected the overhaul to take two or three weeks, but it was completed the next day. Foxconn, Apple's largest supplier, upgraded its production lines proactively to win future orders. The speed and initiative of Chinese companies are far beyond what India can match.

American Airlines even specifically opened first-class flights, flying Apple engineers back and forth to China three times a week. This sounds completely absurd.

But now, Apple is in a dilemma.

McGee bluntly summarized, "Apple needs to leave China, but it cannot do so too quickly."

If it leaves too quickly, it may anger the Chinese government. If it leaves too slowly, it may be caught off guard by geopolitical shocks like those under Trump.

What makes the situation even more complicated is that Trump suddenly told Cook that Apple should not manufacture iPhones in India. However, some informed government officials said that Apple's investment plans in India have not changed.

I really don't know how to assess this situation.

This article is translated from an article on the Zerodha website published on May 17, 2025, titled "Can Apple Really Make Its iPhones in India?" Original link:

https://thedailybrief.zerodha.com/p/can-apple-really-make-its-iphones?r=4sj183&utm_medium=ios&triedRedirect=true

Original: https://www.toutiao.com/article/7559969012517388863/

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