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Investing.com -- Apple’s plans to shift iPhone production from China to India to avoid potential U.S. tariffs may be overly ambitious, according to Jefferies.
While the company reportedly exported $2 billion worth of iPhones from India to the U.S. in late March—a volume equivalent to around four million units—Jefferies analysts remain skeptical about how scalable this strategy is in the near term.
Last week, Reuters reported that Apple (NASDAQ:AAPL) aims to move the production of all iPhones to be sold in the U.S. from China to India.
“This makes sense if we believe U.S. reciprocal tariff on India will be very low, or AAPL gets an exemption. However, this may not be realistic,” analysts led by Edison Lee said in a note.
Currently, only about 15% of iPhones are assembled in India, mostly limited to the base and Plus models.
Jefferies estimates Apple sold around 65 million iPhones in the U.S. in 2024, with approximately 36 to 39 million of those being Pro or Pro Max models.
Ramping up Indian production of these higher-end variants “from zero to ~40 million in two years is a tall order,” the analysts wrote, citing their complex assembly involving titanium frames, triple cameras, and larger batteries.
“Moreover, there is likely to be a foldable model in 2026, the assembly of which is even more challenging. Therefore, we still see cost/margin risk at Apple,” they added.
The analysis comes amid a broader effort by consumer electronics makers to front-load shipments ahead of potential tariffs.
Apple’s late-March shipments were partly driven by this “pull-in” dynamic, and Jefferies noted that similar moves by key Chinese suppliers such as Luxshare and BYD (SZ:002594) Electronic were already factored into forward guidance.
Jefferies expects Apple to beat its modest Q1 revenue growth estimate of 0.9%, helped by a pull-in of shipments ahead of potential tariffs. Industry data shows iPhone shipments rose 10–14% in the quarter, supported by $2 billion worth of exports from India to the U.S. in late March, with likely more in April.
While Apple suppliers issued strong Q2 guidance, Jefferies warns this pull-in may front-load demand and create downside risk in Q3.
The brokerage remains “downbeat” on the iPhone 17 outlook.