With iPhone 17, Apple Reduces Its Dependency on China

For nearly a decade, Apple has been trying to reduce its dependency on China for production of its cash cow, the iPhone. With the iPhone 17, it’s taking a major step in that direction. All models of that phone will be made in India, Bloomberg reported Tuesday.

Bloomberg noted: “The company is producing all four iPhone 17 models in India ahead of their debut next month, marking the first time that all new variations — including pro-level versions — will ship from the South Asian country from the get-go, according to people with knowledge of the matter.”

“Few consumers recognize that Apple shifting iPhone production away from China is highly significant because it reduces its exposure to geopolitical tensions, tariffs, and supply chain disruptions,” said Mark N. Vena, president and principal analyst at SmartTech Research, a technology advisory firm, in Las Vegas.

“For decades, Apple’s dependence on Chinese factories was both a strength and a vulnerability,” he told TechNewsWorld. “Diversifying into countries like India and Vietnam signals a major recalibration of its global strategy. It’s also a recognition that resilience is now as important as efficiency in supply chains.”

“Apple has successfully demonstrated that now other nations, such as India, can be credible and effective producers and suppliers of complex consumer electronics and IT products thought previously only possible to produce at cost-effective scale in China,” added Stephen Ezell, director of global innovation policy at the Information Technology and Innovation Foundation (ITIF), a science and technology think tank, in Washington, D.C.

“This follows a study by UBS Evidence Lab, which found that 71% of U.S. companies with manufacturing in China were in the process of or planning to shift operations to other countries,” he told TechNewsWorld. “Not only has China become a higher-cost manufacturing environment, it’s showing that companies are dissatisfied with other challenges of operating in China, such as ever-present threats of intellectual property theft.”

Apple Risks in Leaving China

Migrating iPhone production to India may be a necessary move, but will likely be one Apple regrets, contended Rob Enderle, president and principal analyst at the Enderle Group, an advisory services firm, in Bend, Ore.

“A big part of what allows Apple to enjoy such spectacular margins is the low cost of Chinese manufacturing and the methods they use to assure the products built there won’t be easily moved to another geography,” he told TechNewsWorld.

“From a financial and quality standpoint, Chinese manufacturing worked extremely well for Apple until the Trump tariffs hit,” he explained.

Enderle added that he expected the quality of the iPhone to degrade significantly initially as new assembly teams are trained and put on the lines. “Chinese quality is generally believed to now be better than Indian quality,” he said.

Although there have been reports of initial quality control issues in India, Apple’s brand demands consistency across all markets, SmartTech’s Vena argued. “Over time, Apple has tightened oversight and invested in worker training to align Indian production with its global standards,” he said.

“Consumers are unlikely to notice any difference in product quality,” he added. “Apple knows its reputation depends on making sure ‘Made in India’ matches ‘Made in China’ in precision and reliability.”

Tariffs and Apple’s India Strategy

Apple began making iPhones in India in 2017 with the iPhone SE, expanded production from 2019 to 2022 with the iPhone XR, 11, and 12, and ramped up local assembly with the iPhone 14 and 15 in 2023 and 2024. The iPhone 17 models will be produced in five factories across India.

“There’s a lot of important, basic, fundamental business reasons why you want to diversify where your manufacturing is done,” said Bob O’Donnell, founder and chief analyst with Technalysis Research, a technology market research and consulting firm, in Foster City, Calif.

“When these efforts started a long time ago, the idea was, ‘Let’s build a product in India because that opens up this enormous market for us,’” he told TechNewsWorld.

It was also a way to avoid tariffs. “India has had very high tariffs on products not manufactured in the country,” O’Donnell explained. “So a lot of the initial motivation that Apple had was to be able to sell products built in India, tariff-free to 1.3 billion Indians.”

Indian tariffs aren’t the only ones Apple has had to worry about recently. Hefty U.S. tariffs are being imposed on goods imported from China and India, but Apple managed to avoid them by promising to invest US$600 billion in U.S. semiconductors, manufacturing, and glass.

“Apple holds significant manufacturing exposure in China and India, and we believe it needed to placate the Trump administration with U.S. investment to avoid costly tariffs,” William Kerwin, a senior equity analyst with Morningstar Research Services in Chicago, wrote in an August 7 analyst note.

“We’ve estimated roughly 15% earnings risk for Apple from tariffs,” he continued. “All U.S.-bound iPhones are manufactured in either India or China. Apple’s primary products have been exempt so far, and a long-term exemption will allow Apple to keep profits without raising prices.”

Apple’s India Bet on Future Growth

Tariffs are a serious issue, particularly for high-tech companies that do offshore manufacturing. “They are all vulnerable and on edge because of this administration’s tariff policies, which can change anytime Trump wants to use them for leverage to get what he wants,” observed Tim Bajarin, president of Creative Strategies, a technology advisory firm, in San Jose, Calif.

“This presents real challenges for all companies that manufacture overseas and puts pressure on all companies and economies involved,” he told TechNewsWorld.

SmartTech’s Vena noted that U.S. tech firms are always vulnerable when manufacturing overseas intersects with domestic politics. “Trade wars, tariffs, and shifting foreign policy priorities can upend finely tuned supply chains overnight,” he said. “Apple and others mitigate this by diversifying production and lobbying heavily in Washington. As long as manufacturing is global, political risk will remain a factor in their strategies.”

“But Apple’s shift out of China is not just about risk — it’s about positioning for the future,” he added. “India represents not only a manufacturing hub but also a massive growth market for iPhone sales. By embedding itself in India’s economy, Apple is tying production to demand in a very strategic way. In many ways, this move could define Apple’s next decade as much as the iPhone did its last.”