Apple has announced plans to acquire over 19 billion chips from domestic sources this year, signaling a strategic shift in its global supply chain aimed at reducing dependence on China while boosting production capabilities in India for iPhone manufacturing.
During a recent earnings call, CEO Tim Cook highlighted a stronger collaboration with Taiwan Semiconductor Manufacturing Co. (TSMC), which is in the process of expanding its operations in Arizona to establish additional plants. Cook also expressed confidence that Apple will increasingly manufacture a majority of its U.S.-bound iPhones in India, as the company looks to decrease production in China amid potential punitive tariffs from the Trump administration. Notably, India was frequently mentioned in the call, underscoring its growing significance to Apple’s operations.
When questioned about how impending tariffs on consumer electronics might impact Apple’s business, Cook remained non-committal, stating, “It’s very difficult to predict beyond June.” Chief Financial Officer Kevan Parekh added that Apple’s remarks during the call assume current tariff rates and policies remain unchanged, alongside a stable global economic outlook.
The quarterly earnings report from the Cupertino-based firm did not alleviate investor worries regarding its considerable challenges, such as rising tariff expenses and sluggish growth in China. Following the announcement of second-quarter results, which included disappointing sales figures from China, Apple shares fell by as much as 4.2 percent in after-hours trading.
Apple’s production expansion in India has accelerated, tapping into a thriving market as sales in China decline. Currently, the company produces 20 percent of its iPhones in India, and plans to import the majority of iPhones for the U.S. market from India by the end of next year.
“We have a complex supply chain, and there is always risk involved,” Cook told analysts. “What we learned some time back was that concentrating everything in one location came with excessive risk, prompting us to diversify certain segments of our supply chain over time.”
While former President Trump has urged Apple to increase domestic manufacturing, transforming production at scale in the U.S. does not appear likely in the near term. Nonetheless, Cook has committed to enhancing local sourcing of chips and other components.
This year, Apple plans to procure tens of millions of advanced processors from a new TSMC facility in Arizona, which has commenced production for lower-end iPads and Apple Watches, according to Bloomberg News. Both Apple and TSMC have pledged substantial investments in the U.S., amounting to hundreds of billions of dollars, aligning with government initiatives to promote advanced manufacturing.
The previous administration imposed tariffs on imports from China and warned of further levies against countries that do not engage in new trade negotiations in the coming weeks. Currently, some electronics, including iPhones, are exempt from these tariffs.
Additionally, Cook discussed the company’s sourcing of glass for iPhone screens from U.S. manufacturers, likely referencing Corning Inc. Earlier this year, Apple announced a plan to invest approximately $500 billion in the U.S. over four years, including the production of AI servers at a facility in Texas.
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