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Apple’s recent advancements in diversifying its supply chain reflect an attempt to reduce reliance on manufacturing in China, with an increased focus on countries like India and Vietnam. However, the introduction of new tariffs by the U.S. government poses challenges for these nations as well.
In a recent announcement, U.S. President Donald Trump established “reciprocal tariff” rates that will affect over 180 countries. While China is set to face a steep tariff of 34%—compounding an existing 20%—the total effective tariff on goods from China now stands at 54%. India will see a 26% tariff, while Vietnam’s rate is even higher at 46%.
Apple has not provided immediate comments regarding how these tariffs might impact their operations, as reported by CNBC. Here’s a closer look at the components of Apple’s supply chain that could be influenced by these changes.
China
China remains the dominant hub for Apple’s iPhone production, with the majority of devices being assembled by Foxconn. Current estimates indicate that approximately 80% of Apple’s overall production capacity is based in China. According to reports from Evercore ISI, around 90% of the company’s iPhones are manufactured there.
Despite a decline in the number of manufacturing sites in the country between 2017 and 2020, this trend reversed in subsequent years, as noted by Bernstein. Presently, Chinese suppliers contribute to around 40% of Apple’s total supply chain. Manufacturing in China is substantial, with estimates stating that 55% of Mac products and 80% of iPads are constructed within its borders.
India
In an effort to bolster its manufacturing presence in India, Apple aims to produce around 25% of its global iPhones in the country, as indicated by a government minister in 2023. Bernstein analysts project that by the end of 2025, India could account for approximately 15%-20% of total iPhone production, with current figures estimating that 10% to 15% of iPhones are assembled in India.
Vietnam
Vietnam has emerged as a significant player in the consumer electronics manufacturing sector over recent years, with Apple increasing its production footprint in the region. Current data shows that about 20% of iPad production and an impressive 90% of Apple’s wearable products, such as the Apple Watch, are manufactured in Vietnam, according to Evercore ISI.
Other Key Countries
Beyond India and Vietnam, Malaysia is becoming an important manufacturing location for Apple’s Mac products and will see a 25% tariff. Thailand also serves as a smaller hub for Mac production, facing a 36% tariff. Additionally, Apple sources components from other notable countries including South Korea, Japan, Taiwan, and the United States, with the possibility of components being transported between nations before assembly occurs in China or other locations.
Looking ahead, Apple has announced plans for a new factory in Texas focused on artificial intelligence servers as part of a significant $500 billion investment in the U.S. However, mass production remains largely absent in the United States, with the only notable exception being the production of the Mac Pro.
Source
www.cnbc.com