Tech titan Apple (AAPL) has been trying to move more iPhone production to India in order to rely less on China, where about 80% of its smartphones are still made. However, tensions between China and India have made that difficult, according to The Information. Earlier this year, Chinese officials blocked one of Apple’s suppliers from sending key equipment to India for the iPhone 17’s test production. To get around this, the supplier used a fake company in Southeast Asia in order to ship the machines to India, where they ended up at Foxconn’s factory.
This shift to India is crucial for Apple, especially with the U.S. planning to raise tariffs on Chinese-made products to as high as 125%, while Indian-made products face only 10% for now, although that will rise to 27% after 90 days. It is also worth noting that Apple started moving some manufacturing out of China about five years ago due to rising political tensions and strict COVID-19 lockdowns that disrupted production. Apple has quietly moved the assembly of products like AirPods to Vietnam without much pushback from China. But moving iPhone production to India is different.
Apple Cannot Just Copy Its Operations from China to India
Currently, India makes 30-40 million iPhones a year, which is around 20% of Apple’s global output, and Apple plans to grow that by 10% this year. Its long-term goal is to shift around half of all iPhone production out of China, but many challenges are getting in the way. One major problem is that Apple cannot just copy its operations from China to India. Labor laws in India required three eight-hour shifts instead of two 12-hour ones, which meant hiring more people. Even after laws changed to allow 12-hour shifts, workers didn’t want to do them.
Apple also struggled to set up subassembly lines in India due to cost and quality issues and had to move that part of the process back to China. In some cases, Indian workers could not use the machines because the software was in Chinese, so Apple asked suppliers to provide English versions.
Meanwhile, China has delayed or blocked the export of equipment Apple needs in India. To fix this, Apple is asking suppliers to build factories in Southeast Asia or use machines from Japan, South Korea, or Taiwan, though that would take at least a year to test. For now, some work normally done by machines in China is being done by hand in India because of the delays.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 19 Buys, 13 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $236.78 per share implies 14.5% upside potential.
