In a significant move to deepen its manufacturing footprint in India, technology giant Apple has initiated preliminary discussions with domestic chipmakers for the assembly and packaging of iPhone components. This development, first reported by the Economic Times on Wednesday, marks the first time Apple is considering such advanced semiconductor work within the country.
Apple's Strategic Shift to Indian Semiconductor Ecosystem
According to sources familiar with the matter, Apple has held talks with the Murugappa Group-owned CG Semi. This company is currently establishing an Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. While the specific chips to be packaged at this facility are not yet finalized, industry insiders suggest they are likely to be display-related components crucial for iPhone production.
This initiative is a key part of Apple's broader strategy to diversify its supply chain away from China. A Reuters report from April indicated that Apple is accelerating plans to shift the manufacturing of all iPhones sold in the United States to India by the end of 2026. This accelerated timeline aims to mitigate risks associated with potentially higher tariffs on Chinese imports.
The Driving Forces Behind Apple's India Push
The push towards India is heavily influenced by global trade dynamics. In April, the US administration imposed a 26% tariff on imports from India, which was notably lower than the over 100% tariffs levied on Chinese goods at that time. Although Washington later paused most duties for three months, the tariffs on China remained, creating a clear incentive for companies like Apple to relocate production.
The tariff announcement earlier led to a sharp market loss of around $700 billion for Apple. Subsequently, the US government's exemption of electronic items like smartphones from these tariffs provided relief. However, the experience underscored the vulnerability of a concentrated supply chain.
Even before the recent tariff pressures, Apple had been actively encouraging its suppliers from China, Japan, Taiwan, and other regions to set up manufacturing bases in India. This effort has seen success, with several key partners, including Sunwoda for battery packs, Foxlink for cables, and Aequs for device cases, already commencing production in the country.
Why India, Not the USA?
A critical question is why Apple is expanding in India instead of bringing more manufacturing back to the United States. As reported by Mint in May, the answer lies in economics and infrastructure. Lower-cost skilled labour and the presence of well-established, precision-engineered supply chains are the primary factors drawing Apple to manufacturing hubs in China and, increasingly, India.
In contrast, manufacturing and labour costs in America are significantly higher. This makes component sourcing far more expensive and less competitive for high-volume consumer electronics like the iPhone. India offers a compelling combination of skilled workforce, improving infrastructure, and favourable government policies under schemes like the Production Linked Incentive (PLI).
This strategic expansion aligns with Apple's ambitious production goals for India. According to a previous Financial Times report, Apple seeks to double iPhone production in India to a staggering 80 million units. This scale is essential to meet a target of supplying 60 million iPhones for the US market by 2026.
The talks with CG Semi represent a new, more sophisticated phase of Apple's 'Make in India' journey, moving beyond final assembly to include the crucial packaging of core components, thereby strengthening the local electronics manufacturing ecosystem.
