It’s a supply chain shake-up.
Apple CEO Tim Cook announced that most Apple products sold in the U.S., including iPhones, will soon be manufactured outside of China. Instead, production is shifting to countries like India, which will handle the bulk of iPhone manufacturing, and Vietnam, which will produce a range of other products such as iPads, Apple Watches, Macs, and AirPods. This change comes in response to the new U.S. tariff policies targeting goods made in China.
During an earnings call discussing Apple’s second-quarter financials, Cook explained that the company is adapting its supply chain to minimize exposure to tariffs. Though China will remain a major production hub for devices sold outside the U.S., Apple has started building up inventory to ensure most devices sold domestically are not sourced from China this quarter. The company is aiming to reduce its reliance on a single manufacturing location due to the inherent risks involved.
Recent U.S. tariffs, including a 145% levy on Chinese imports, prompted this shift. Although the Biden administration issued temporary exemptions for some electronics, Cook acknowledged the potential for increased production costs. He estimated that tariffs could add approximately $900 million to Apple’s expenses in the current quarter, assuming no further policy changes.
Despite the geopolitical and economic uncertainty, Cook noted that the tariff tensions have not yet negatively affected Apple’s sales, nor have customers rushed to buy products ahead of potential price hikes. Apple’s revenue for the second quarter reached $95.36 billion, slightly surpassing analyst expectations.
Looking ahead, Cook shared Apple’s plans to invest $500 billion in expanding its U.S. operations. This includes growing teams across several states and opening a new factory in Texas focused on advanced server manufacturing. However, amid growing scrutiny of the electronics supply chain in Washington, Apple’s reliance on international manufacturing may continue to face pressure.
