In a strategic pivot shaped by shifting trade dynamics and rising tariffs, Apple Inc. will source the majority of iPhones sold in the U.S. from India in the June 2025 quarter, according to CEO Tim Cook. This marks a historic shift in Apple’s global supply chain model, long dominated by China, and highlights India’s growing role as a critical manufacturing hub for the Cupertino-based tech giant.
During Apple’s second-quarter earnings call, Cook also revealed that Vietnam will become the country of origin for nearly all iPads, Macs, Apple Watches, and AirPods sold in the U.S., while China will continue to manufacture the lion’s share of devices meant for non-U.S. markets.
Navigating Tariffs: The Driving Force Behind the Shift
Apple’s restructuring of its supply chain is directly tied to escalating tariff pressures. For the June quarter, imports from China into the U.S. are subject to a 20% tariff—a significant cost burden. In April, this was compounded by an additional 125% tariff on certain product categories, such as accessories and AppleCare services, bringing the effective rate for some items to 145%.
To mitigate these impacts, Apple is moving iPhone production for the U.S. to India, where goods are not currently affected by these heightened tariffs. Cook emphasized that while most of Apple’s core products are not subject to global reciprocal tariffs, the company is preparing for evolving regulations, including a U.S. Section 232 investigation into imports of semiconductor-related products.
Apple estimates that under current conditions, the tariff impact could add $900 million in costs for the June quarter alone.
India and Vietnam: The New Pillars of Apple’s Manufacturing Strategy
This reconfiguration signals more than just a temporary workaround. Apple’s deepening reliance on India and Vietnam shows its growing confidence in the manufacturing maturity of these markets. In India, Apple’s key production partners—such as Foxconn and Pegatron—have rapidly expanded operations, backed by government incentives under the Production-Linked Incentive (PLI) scheme.
The move also comes as part of a broader diversification strategy known as “China+1”, aimed at reducing overdependence on any single geography. Vietnam, already a hub for Apple’s peripheral devices, is stepping up its role in producing high-value hardware.
Sales, Services, and the Bigger Picture
Despite a 2% year-over-year decline in iPhone sales to $46.84 billion, Apple posted an overall 5% increase in revenue, reaching $95.35 billion for the second quarter ending March 29, 2025. This was largely driven by growth in services, Macs, and iPads, underlining the shifting dynamics of Apple’s revenue streams.
Services, in particular, continue to emerge as Apple’s most resilient segment, insulating it against the cyclicality of hardware demand. However, the iPhone remains Apple’s flagship product—its manufacturing and market strategy will be watched closely by both investors and geopolitical observers.
The Global Tech Supply Chain Is Being Redrawn
Apple’s decision to lean on India for iPhone production in the U.S. market reflects more than just an economic response to tariffs—it underscores the emergence of a new global supply chain order. Amid geopolitical fragmentation, rising protectionism, and localized regulatory pressures, companies like Apple are being forced to redesign their operations with resilience and agility in mind.
For India and Vietnam, this marks a watershed moment—a signal that they are no longer peripheral players but central actors in the global tech economy. For Apple, it’s a necessary evolution—balancing profit margins, regulatory exposure, and operational scalability in a world where economic efficiency increasingly intersects with political complexity.
(With agency inputs)
