Apple Inc. announced that the majority of its products sold in the United States during the June quarter will be manufactured in India and Vietnam, rather than China.
This move comes as the company seeks to mitigate the impact of escalating US-China trade tensions and diversify its global supply chain. During the company’s Q2 2025 earnings call, CEO Tim Cook revealed that most iPhones sold in the US this quarter will be sourced from India, while nearly all iPads, Macs, Apple Watches, and AirPods will be produced in Vietnam. This marks a notable departure from Apple’s previous reliance on China, where the company has historically manufactured over 90% of its products.
The shift is a direct response to the ongoing trade war between the United States and China, which has seen the US impose a 145% tariff on Chinese goods, while China has retaliated with a 125% tariff on US products. These tariffs have significantly increased production costs for companies like Apple, prompting them to explore alternative manufacturing locations. India and Vietnam have emerged as attractive alternatives due to their competitive labor costs, favorable trade policies, and growing manufacturing capabilities. In India, Apple has been expanding its production footprint, with suppliers like Foxconn and Pegatron investing in new facilities. The country now manufactures approximately 7% of all iPhones, a figure that has tripled in the last fiscal year.
Similarly, Vietnam has become a key location for Apple’s accessory production, including AirPods and other peripherals. The Vietnamese government has supported this expansion by offering tax incentives and land leases to foreign manufacturers, creating a conducive environment for companies like Apple to establish operations. Despite the positive financial results, Apple’s stock experienced a nearly 3% decline in premarket trading following the announcement of increased tariff-related costs and a reduction in its share buyback program. The company anticipates an additional $900 million in tariff-related expenses for the June quarter, which could impact its profit margins.
Apple’s diversification strategy is part of a broader trend known as the “China Plus One” approach, where companies seek to reduce their dependence on China by investing in other emerging markets. This strategy not only helps mitigate risks associated with geopolitical tensions but also aligns with India’s “Make in India” initiative, which aims to boost domestic manufacturing and exports. While the shift to India and Vietnam represents a significant change in Apple’s supply chain strategy, the company continues to face challenges in China. Sales in the country have declined by 2.3%, and the company faces increased competition from local rivals like Huawei.
In conclusion, Apple’s move to shift a significant portion of its US production to India and Vietnam underscores the growing importance of supply chain diversification in the face of global trade uncertainties. As the company continues to navigate these challenges, its ability to adapt and innovate will be crucial in maintaining its competitive edge in the global market.
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