Apple has announced that it is moving the production of most iPhones and other devices destined for the U.S. away from China, a shift driven by the tariffs imposed by President Donald Trump. The company’s CEO, Tim Cook, shared that the majority of iPhones headed to the U.S. in the upcoming months will be made in India, while Vietnam will serve as a key production hub for products like iPads and Apple Watches.
This move comes as Apple predicts that U.S. import taxes could add approximately $900 million (£677.5 million) to its costs in the current quarter, despite Trump’s decision to exempt certain electronics from the new tariffs. The U.S. government has repeatedly urged Apple to shift its production to the U.S.
As companies globally navigate the changes in international trade policies sparked by U.S. actions, Apple emphasized its significant investments in the U.S. during a financial call with investors. Tim Cook began the discussion by reminding them of the company’s plans to invest $500 billion across various U.S. states over the next four years.
Production Shift to India and Vietnam
Cook confirmed that India and Vietnam would benefit most from this shift in production. “We do expect the majority of iPhones sold in the U.S. will have India as their country of origin,” he said. Vietnam will become the primary hub for manufacturing products like iPads, MacBooks, Apple Watches, and AirPods sold in the U.S. However, China will continue to be the source of most Apple products sold outside the U.S.
Relocating production to India will take time and requires substantial investment, estimated to cost billions of dollars. Shanti Kelemen, Chief Investment Officer at M&G Wealth, noted that Apple would face costs related to moving supply chains, building new factories, and still being subject to tariffs. “Apple has said they want to invest $500 billion over the next few years,” Kelemen commented.
Impact of Tariffs on Apple’s Stock
Following Trump’s announcement of “reciprocal tariffs” designed to encourage companies to manufacture more in the U.S., Apple’s stock took a hit. However, the pressure on the administration led to certain electronics, including phones and computers, being exempt from the tariffs.
Despite the trade uncertainties, Apple’s sales have remained strong. For the first quarter of the year, Apple reported a 5% increase in revenue, reaching $95.4 billion. Other tech giants, such as Amazon, also reported resilience, with Amazon’s sales increasing by 8% year-on-year in North America.
Future Prospects and Resilience
Both Apple and Amazon are working on strengthening their positions in the face of ongoing tariff challenges. Amazon’s CEO, Andy Jassy, expressed optimism about the future, noting that the company had successfully navigated previous disruptions, such as the pandemic, and was likely to do so again.
Patrick Moorhead, CEO of Moor Insights & Strategy, commented on Apple’s shift, calling it “impressive” and a significant change from Cook’s earlier statements that only China could produce iPhones. He noted that while much progress remains, the move marks a positive start.
Apple’s move to India and its overall strategy to diversify production sites highlight its adaptability in the face of global trade disruptions.
