Apple’s Persistent China Manufacturing Presence
Despite Apple’s strategic shift of iPhone production to India, the company will still maintain significant manufacturing operations in China, according to new analysis from Jefferies. The tech giant’s efforts to de-risk its global supply chain haven’t eliminated its exposure to Chinese manufacturing, with projections showing Apple will ship approximately 9 million iPhone units directly from China to the United States in fiscal year 2026.
Two-Pronged Strategy Against Tariff Risks
Apple implemented a comprehensive two-pronged approach to mitigate risks from the ongoing China-United States trade war. The company’s strategy involved diversifying production locations while optimizing its supply chain to minimize the impact of potential tariff increases. These measures successfully reduced Apple’s vulnerability to trade-related disruptions, but recent geopolitical developments have reintroduced uncertainty into the equation.
Renewed Trade Tensions Create Uncertainty
The macroeconomic climate has turned cautious again following recent escalations in trade tensions. Former President Trump’s comments about potential 100 percent tariffs on Chinese exports, coupled with concerns about rare earth export restrictions, have created renewed uncertainty for companies with significant Chinese manufacturing presence. While the administration has since moderated its stance, the threat of additional tariffs remains a concern for global supply chains.
India Production Limitations Revealed
Jefferies analysis indicates that Apple’s Indian production base cannot fully meet US demand in the near term, making the company more exposed if tariffs are enforced. The analyst note specifically highlights that despite Apple moving the bulk of its production activities to India, the company would still need to rely on Chinese manufacturing to satisfy the soaring demand for iPhone devices in the American market.
FY 2026 Projections and Timeline
The Jefferies projection of 9 million iPhone units shipping from China to the US in FY 2026 represents a significant portion of Apple’s US-bound shipments. Bear in mind that Apple’s new fiscal year commences in October, meaning these shipments would occur between October 2025 and September 2026. This timeline coincides with potential political changes and trade policy developments that could further impact Apple’s supply chain strategy.
Ongoing Supply Chain Challenges
Apple’s continued reliance on Chinese manufacturing highlights the complexities of global supply chain management for tech giants. The company’s experience demonstrates that even well-executed diversification strategies face practical limitations when scaling production to meet massive consumer demand. As experts note, completely decoupling from Chinese manufacturing presents significant challenges for companies operating at Apple’s scale.
