Trump Urges Apple to Halts iPhone Manufacturing Transition to India
US Prez Trump Pushes Apple to Produce More in USA, Not India
Donald Trump, the US President, has put a surprising demand on Apple Inc's CEO, Tim Cook. He wants Cook to halting plans to create iPhone manufacturing units in India, instead focusing on boosting domestic production within the States.
During a chat in Qatar, Trump shared, "I had a minor squabble with Tim Cook yesterday. He's constructing everywhere in India. I don't want you building in India." Reportedly, this exchange led Apple to allegedly commit to amplifying its production in the United States.
Unfortunately, Apple's representatives in India have yet to respond to the query for their take on this conversation.
Picture courtesy of Saul Loeb, AFP
Trump's statement casts a shadow over Apple's intentions to shift most of its iPhone sales to the US from India, aiming to sidestep risks related to tariffs and political strife.
At present, Apple primarily manufactures its iPhones in China and has no home-grown iPhone production in the US, even though it's pledged to invest more in domestic jobs and promised a whopping $500 billion investment in America over the upcoming four years.
There's a substantial challenge in creating iPhones from scratch in the US, even for a financially powerful company like Apple. The iPhone production chain and specialized labor force have been firmly rooted in China for quite some time now. Appendage to this, Apple's only begun forging local connections in India. The high cost of American labor, coupled with manufacturing expenses, render iPhone production in the US financially impracticable. In contrast, India boasts an ever-growing customer base lusting after Apple's iconic products and offers subsidies to help expand assembly.
Analyst Tarun Pathak, from research firm Counterpoint, opines that Trump is applying an age-old tactic, aiming to drive Apple to establish a localized supply chain within the States. Nevertheless, building iPhones in the US will likely be much more expensive than assembling them in India.
Pathak comments, "Apple has one of the most refined supply chains, developed over years. Disrupting this or completely abandoning China and India will be incredibly difficult."
Apparently, Trump is okay with Apple producing the devices in India for the Indian market. "You can construct in India if you wish, to cater to India," he said.
Trump also touched upon tariff negotiations with India, revealing India's intent to eliminate taxes on goods imported from the United States. India is notorious for maintaining high tariff barriers, making it incredibly tough to peddle American wares to the most populous nation on the planet, Trump stated.
Within India, iPhone factories produce over 40 million units per year, accounting for about 20% of Apple's annual output.
Most of the India-produced iPhones are assembled at Foxconn Technology Group's southern Indian factory. Tata Group's electronics manufacturing arm, which recently took over Wistron Corp's Indian business and manages Pegatron Corp's operations in the country, is another key supplier. Additionally, Tata and Foxconn plan to construct new manufacturing units and expand their production capacity in India's south, as per previous reports in Bloomberg News.
Apple has channeled approximately $22 billion worth of iPhone production to India in the past 12 months, observing a nearly 60% increase in production compared to the previous year.
Sources:1. MacRumors2. Bloomberg3. The Economic Times
*Photograph is not included due to character limit.
- The demand from US President Trump for Apple to boost domestic production in the States raises questions about Apple's intentions to shift most of its iPhone sales to the US from India, a move aimed at avoiding tariff risks and political strife.
- In the face of Trump's push, Apple may find it more challenging to produce iPhones in the US than assembling them in India, given the established iPhone production chain and specialized labor force in China, and the subsidies offered by India to help expand assembly.
- Despite Trump's request, Apple will likely continue iPhone production in India to cater to the growing Indian market, while also working to establish a localized supply chain within the US, as suggested by analyst Tarun Pathak.
