Made in India or China: Why the iPhone Still Isn’t Made in the US

Apple has a new ultimatum: make iPhones in the United States of America or face an additional 25 per cent tariff on iPhones. US President Donald Trump on Friday said he spoke with Tim Cook to tell him that iPhones sold in the US “will be manufactured and built in the United States, not India or anyplace else.” If Apple does not comply, it must pay “at least” 25 per cent tax to the US government. Trump’s motive with the new order is clear: he wants to ramp up America’s manufacturing ecosystem, and Apple would sit right at the top because of the iPhone’s popularity in the US.

Despite being one of the most iconic American companies, Apple never produced the iPhone in the US — although it briefly made Mac computers in the 80s. For years, it relied on China, and when the ties between Beijing and Washington began to sour, it diversified the supply chain to other countries — all within Asia. While the phrase “Designed in California” etched into every iPhone gives a sense of its American linkage, the reality is that none of iPhone’s components are made in the US. But why not? Why has Apple relied on Asian countries — first China and now India — to manufacture what arguably is the world’s most premium smartphone?

Cost equation

Cook has repeatedly said the manufacturing ecosystem in China is way ahead of anywhere else in the world. But a more important aspect is cost. Manufacturing an iPhone in the US would be dramatically more expensive due to America’s strict labour laws, guaranteeing higher wages, and costlier infrastructure needed to erect a supply chain.

According to Tarun Pathak, Research Director at market analytics firm Counterpoint Research, building an iPhone in the US could hike its price by $100-$200 — a premium that could repel most customers not just in the US but globally, including price-sensitive markets such as India. “In the case of smartphones, supply chains are so seamlessly integrated and Asia dominated,” said Pathak, adding that it would be nearly “impractical” for US companies to localise production at this stage.

China — followed by India — has provided a favourable environment to Apple to manufacture its iPhones. It includes a strong network of component suppliers, manufacturing talent, and logistics infrastructure — which Apple barely had to focus on to build. Companies such as Foxconn — Apple’s biggest supplier — have one of the most modern equipment and skilled workforce to assemble millions of iPhone units in a stipulated time. Foxconn and other suppliers expanded their bases to India shortly after Apple kickstarted its plans to minimise reliance on China due to uncertainty with the US. India emerged as a top spot, attracting Foxconn, Pegatron, and other companies, who received the Indian government’s support as part of the production-linked incentive (PLI) scheme.

Skilled labour

While cost is an important aspect of a supply chain, skilled labour is its backbone. Assembling iPhones requires an army of skilled labourers and trained technicians who Apple expects to quickly respond to design changes, test protocols, and yield issues. China and India’s population, along with their vocational education system, make it possible, allowing a large and skilled population — something the US struggles to match because of its economy mostly driven by white-collar jobs.

Cook once famously pointed out that if Apple wanted to assemble all the technicians and engineers it needs to build an iPhone in the US, it might only fill a room. In China, he said, the same talent pool would fill several city blocks. That same sentiment is gradually becoming true for India, where Apple has aggressively increased iPhone production over the recent years.

India: A top choice

The tensions between the US and China are not new, but they were mostly benign from a trade perspective before Donald Trump took charge of the presidency for the first time. That triggered Apple, along with several other companies, to find workarounds in case their long-standing manufacturing ecosystems were to fail due to the broadening of the trade rift between the US and China.

Apple chose India as an alternative to China, but with the help of the PLI scheme and the government’s Make in India initiative, the iPhone production ecosystem — mostly located in the southern parts — expanded rapidly. Foxconn, Tata Electronics, and Pegatron are among Apple’s key suppliers that have manufacturing hubs in Tamil Nadu, Andhra Pradesh, and Karnataka.

During the last earnings call, Cook said India accounts for 20 per cent of global iPhone production and is on track to make all iPhones sold in the US by 2027. Right before Trump’s tariffs were expected to come into effect in April, Apple reportedly shipped five planes full of iPhone units from India to offset price hikes, while meeting demand surged by panic-buying in the US. Still, India is currently viewed more as a geopolitical hedge than China’s replacement. Apple’s bullish investments in its Indian supply chain show it is serious about the China-Plus-One strategy with India in mind. But whether its long game will make India a true replacement is yet to be seen.

Can the US ever manufacture the iPhone?

The biggest question is whether Apple can build the iPhone in the US, and its answer is yes, at least in theory. The US has some manufacturing bases for some smartphone components that do not necessarily go into an iPhone. For instance, Corning builds some of its tough mobile glass films in the US, while Broadcom also develops a few radio chips. However, the challenges are big and would take years to overcome. The US would need to build semiconductor fabrication units heavily before it can turn to component manufacturing and finally assemble an iPhone. Some of it could be possible with Apple’s impending $500 billion investment in the US, but uprooting its Asian supply chains and relocating them to the US is an uphill task even for Apple. And even with Trump's push, the iPhone's manufacturing roots may remain in Asia — for now.

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