Apple’s (AAPL) subtle manufacturing shift to India has gained momentum as U.S.-China trade tensions intensify. The 10% tariff on Chinese imports under U.S. President Donald Trump has increased the need for Apple to diversify its supply chain. The company has been following a strategy known as China Plus One, which aims to reduce reliance on China by expanding manufacturing operations to other countries. However, Apple’s supply chain in India still lags behind China’s vast network.
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Foxconn, or Hon Hai Precision Industry (HNHPF), the Taiwanese electronics manufacturer, is Apple’s contract manufacturer in India. In 2024, it began making the iPhone 16 Pro and Pro Max, with AirPods production set to start in Telangana in 2025.
Apple’s Challenging Path in India
Apple will face several major challenges as it works to expand in India. One of the key obstacles will be finding suppliers with the necessary expertise. To achieve this, component manufacturers must be attracted to India with similar revenue opportunities as those in China. Currently, the iPhones made in India are mainly assembled using parts imported from other countries.
Additionally, Apple will need to develop a flexible workforce in India similar to what it has in China, where it can quickly adjust labor needs by hiring tens of thousands of workers when necessary.
On the bright side, Apple has strong partners in India, including Tata (IN:TATATECH), the country’s top conglomerate, which is emerging as Apple’s first full-service supplier. However, as a 157-year-old company relatively new to electronics, Tata will need to quickly adapt to ensure the success of this partnership.
Apple Slows Down Vietnam Production Plans
Apple is reportedly adjusting its strategy by reducing the planned expansion of MacBook production in Vietnam, which was initially set to ramp up in late 2024. This shift reflects a departure from its earlier aggressive expansion plans and underscores the growing importance of India as a key manufacturing hub for the company.
Is Apple Still Good to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on AAPL stock based on 18 Buys, 11 Holds, and four Sells assigned in the last three months. The average Apple share price target of $250.95 implies a 2.6% upside potential.
Over the last 12 months, AAPL stock has gained 35%.
