Apple Shifts to Domestic Chip Production Amid Tariff Pressures and Global Supply Chain Realignment

This year, Apple aims to procure over 19 billion chips from the United States as part of a broader strategy to diversify its supply chain, gradually reducing its dependence on China while increasing its production activities in India for iPhone manufacturing.

During a discussion, Chief Executive Officer Tim Cook highlighted the company’s increasing reliance on Taiwan Semiconductor Manufacturing Co., which is in the process of expanding its operations in Arizona to include six facilities. He also reiterated the expectation that a significant portion of Apple’s iPhones destined for the US market will soon be produced in India, thereby decreasing manufacturing in China, especially in light of potential tariffs imposed by the Donald Trump administration on its Asian competitor. The frequency of mentions of India during Thursday’s conference call, almost on par with China, underscores its growing importance.

However, Cook refrained from addressing a number of questions regarding the potential impact of tariffs on consumer electronics and Apple’s operations, noting that “it’s very difficult to predict beyond June.” Chief Financial Officer Kevan Parekh indicated that the company’s statements during the call were based on the assumption that existing global tariff rates and policies would remain stable and that the overall macroeconomic scenario would not deteriorate.

The quarterly earnings report from the Cupertino, California-based firm failed to alleviate investor worries regarding major challenges such as rising tariff expenses and a slowdown in the Chinese market. Following the announcement of second-quarter results, which included disappointing sales figures from China, the company’s stock fell by as much as 4.2 percent in after-hours trading on Thursday.

Apple has accelerated its manufacturing footprint in India, a market that is beginning to grow at a time when Apple’s sales in China are declining, and which is likely to be a more politically favorable trade ally for the US in the long term. Currently, Apple manufactures about 20 percent, or one in five, of its iPhones in India, and it anticipates sourcing the majority of its iPhones for the US market from India by the end of next year.

“We operate a complex supply chain, and there are always inherent risks,” Cook stated during the call with analysts. “What we’ve learned over time is that concentrating everything in one location carries excessive risks, which is why we’ve gradually opened up new supply sources for specific components, though not for the entire supply chain.”

Beyond India’s role, Trump has insisted that Apple should start producing its devices within the US. Nevertheless, significant scaling of this operation seems unlikely in the near future. For now, Cook has committed to increasing local sourcing of chips and other crucial components.

According to Cook, the iPhone manufacturer will acquire tens of millions of advanced processors from a new facility operated by TSMC in Arizona this year. Reports from Bloomberg News indicate that this facility has commenced producing processors for entry-level iPads and Apple Watches. Both Apple and TSMC have announced US investments totaling hundreds of billions of dollars, in alignment with the White House’s initiative to bolster advanced manufacturing domestically.

The Trump administration has imposed tariffs on goods imported from China and has threatened to enact additional tariffs on other countries that do not engage in new trade agreements in the coming weeks. Currently, some electronics, including iPhones, are exempt from these tariffs.

The CEO of Apple also mentioned that the company obtains glass for its iPhone screens from the US, likely referring to Corning Inc. Earlier this year, Apple announced its intention to invest $500 billion (approximately Rs. 4,225 crore) in the US over the next four years, which includes plans to manufacture AI servers at a facility in Texas.

© 2025 Bloomberg LP

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)