Apple is accelerating its shift away from Chinese manufacturing, planning to make more of its US-bound shipments in India and Vietnam as it braces for sweeping new tariffs. The company is also ramping up domestic chip production and stockpiling iPhones ahead of potential price hikes.
While most of Apple’s products are still assembled in China, roughly half of the iPhones sold in the US now come from India, according to CEO Tim Cook. Vietnam supplies many of Apple’s other hardware lines, and suppliers Foxconn and Tata are reportedly in talks to expand their manufacturing roles, according to an anonymous source who spoke with Reuters.
Production costs in India are estimated to be 5% to 8% higher than in China, which could lead to modest price increases for US consumers.
SEE: iPhones Made in the US? Price Could Triple
Apple is also strategically moving to make chips in the US, with a planned order of 19 billion chips from domestic factories. In March, the company shipped additional iPhones to the US to build a buffer of tariff-free inventory.
According to The Wall Street Journal, Apple began redirecting shipments as early as March to minimize exposure to US tariffs on Chinese goods. Cook told CNBC the tariffs could add $900 million to Apple’s costs. The company’s Q1 performance suggests consumers front-loaded purchases in anticipation of President Donald Trump’s proposed 145% tariff on Chinese-made products.
The Trump administration is using tariffs as a central negotiating tactic in its approach to creating a new trade policy with what the US federal government sees as favorable policies. China remains the primary target. India received a temporary reprieve in March as US officials focused efforts on talks with Beijing.
Apple sales spike in Q1, but the future is uncertain
Apple’s quarterly sales rose 5% in Q1 as consumers tried to make purchases before prices skyrocketed. The only downside for Apple was the Services division, which sells iCloud subscriptions, Apple Music, Apple TV+, warranties, and search licensing.
Apple was able to optimize its supply chain in Q1 and thereby avoided tariff impacts, Cook said in an earnings call.
Like the rest of the industry, Cook is finding it difficult to predict what will happen next in Trump’s back-and-forth negotiation with seemingly the entire world. “I’m not sure what will happen with tariffs” beyond June, Cook said in the call, according to CNBC.
Apple expects revenue to grow “low to mid-single digits” in Q2, finance chief Kevan Parekh said during the earnings call.
