China's iPhone-Making Dominance May Be Coming to an End

China's decades-long dominance in manufacturing Apple's flagship iPhone may be ending as India's alternative base increases production, according to a news report.

"The US tech giant now makes as much as 14 percent or about 1 in 7 of its marquee devices from India, people familiar with the matter said," Bloomberg wrote on April 10. In the fiscal year 2023-24, Apple assembled $14 billion worth of iPhones in India, double the previous year, it said.

And expert Anirudh Suri, a non-resident fellow at Washington think tank Carnegie Endowment's New Delhi office, believes Apple will continue to move its supply chain out of China.

"Moving or diversifying the manufacturing base away from China is a geopolitical imperative for companies like Apple," he told Newsweek. "Their shareholders would punish them if they were to not diversify away and be caught in further geopolitical crossfires, since the U.S.-China tussle is not ending anytime soon."

Former President Donald Trump launched a trade war with China, which has pressured Apple's traditional manufacturing base in the country. President Joe Biden has imposed further technological restrictions on Chinese companies, entrenching the geopolitical competition with Beijing.

Though Washington has said it doesn't want to completely decouple the technology supply chains from China, it has sought to reduce interdependence in sectors such as semiconductors, artificial intelligence, and telecommunications. Driven by national security concerns, the U.S. has imposed export restrictions and investment limits, while China is accelerating its domestic technological advancements.

But geopolitics isn't the only factor forcing Apple to look elsewhere. It subcontracts manufacturing of its products to companies such as Taiwan's Foxconn, an Original Equipment Manufacturer (OEM), that makes iPhones, Macbooks, and other Apple products.

For the last two decades, Apple has partnered with Foxconn in China, but the cost of these products has increased in recent years. So profitability is another pressure, on top of geopolitics, which is pushing Apple to seek new manufacturing locations.

And the Indian government has been quick to exploit the opportunity.

New Delhi is offering lucrative programs to attract companies such as Apple, including the Production Linked Incentive Scheme, a $26 billion golden carrot for companies in 14 sectors, according to India's Ministry of Commerce and Industry.

Newsweek contacted China's Ministry of Commerce, India's Ministry of Electronics and Information Technology, and Apple and Foxconn for comments via email.

Apple's investments in India have started yielding results as the export of its products from the country is on the rise.

"Apple's iPhone exports from India almost doubled to $12.1 billion in 2023-24 from $6.27 billion in the preceding fiscal," Indian news agency Press Trust of India reported on Tuesday, citing data by data firm The Trade Vision.

"India is making a big push for expanding its manufacturing base, and companies such as Apple do want to have a foot in the door," Suri added. "Political stability, state-level manufacturing incentives (states like Tamil Nadu have aggressively courted companies like Apple), and the availability of a skilled workforce add to the attraction.

"Of course, Apple doesn't want to put all its eggs in one basket (e.g., Vietnam), so adding a base like India makes sense."

China accounts for 20 percent of Apple's sales globally, making it one of the biggest consumers of Apple products. However, Apple sales in China are declining as local consumers shift towards domestic mobile brands.

Apple reported a 13 percent year-on-year drop in its sales in China for the December quarter, as revenue in the Greater China region, including Hong Kong, Macau, and Taiwan, fell to $20.8 billion, according to Hong Kong Newspaper South China Morning Post on February 2.