Apple Got the Jump on Tariffs, Deciding Years Ago to Make iPhones in India

Dozens of women wearing ID badges streamed from their rooms in a year-old dormitory for Foxconn workers and headed to a company cafeteria on a recent day for a menu of lentil-and-vegetable stew, beetroot and rice.

- Tripti Lahiri, Yang Jie & Rolfe Winkler

White buses waited outside to ferry them to a factory where the Apple contractor builds iPhones.

Women working on assembly lines in India form the backbone of a strategy Apple Chief Executive Tim Cook set in motion years ago. He first looked to boost Apple's position in India's growing smartphone market after sales in China slowed. Those early steps now leave Apple well-positioned for the intensifying trade rivalry between the U.S. and China.

A year after a 2016 meeting between Indian Prime Minister Narendra Modi and Cook, the company began assembling iPhones in India on a relatively small scale. Apple next pushed suppliers to develop India as an alternative manufacturing hub when President Trump in his first term threatened tariffs on Chinese-made iPhones and, later, when the pandemic slowed iPhone production in China.

The company saw India as the only country outside of China that could assemble iPhones at adequate scale and competitive cost. India's iPhone production capacity is expected to more than double when two new production centers gear up in the next two years. That will allow Apple to increasingly rely on India, instead of China, to supply iPhones to the U.S.

Cook said last week that most iPhones sold in the U.S. came from India during the April-to-June quarter. He didn't elaborate on Apple's long-term plans for supplying the U.S. The company, which declined to comment, reported iPhone revenue in the last fiscal year at $201 billion.

For years, Apple's iPhone gold mine depended largely on Chinese manufacturing and sales. The creation of China's iPhone supply chain over the span of two decades is widely seen as Cook's greatest business achievement. It helped the company wring trillions of dollars of value from its most popular device.

Yet Apple's lucrative position in, and its dependence on, the authoritarian nation—America's most pressing economic and geopolitical rival—has become the company's Achilles' heel.