India could be a significant beneficiary of any move to shift iPhone production meant for the US to a relatively cheaper destination, according to a Counterpoint Research report.
The report stated that India's lower tariff rate of 26% compared to China and Vietnam, combined with its 20% share of the iPhone supply meant for the US in 2024, positions the country well to benefit from any production shift.
“India makes the most sense for now, followed by Brazil, though increasing capacity in both will take time… For Apple and others, there is a list of things that need to fall into place for India to be a better alternative than before – technological readiness of domestic EMS partners, capex appetite, government support and India’s ability to deal with the US at the negotiating table on tariffs. If the country can do these things, it can cement itself as a more favorable production destination,”said Neil Shah, Counterpoint’s Research Vice-President.
Another major tech giant, Samsung—which is less dependent on China but more reliant on Vietnam and South Korea—may also feel the pressure of the tariffs. Vietnam will face a 46% tariff on its exports to the US, which will significantly impact Samsung, as the brand produces more than 60% of its smartphones in the country.
Therefore, the company will have to diversify its production to India or other countries to avoid the tariff. However, for the time being the Trump administration has postponed tariff implementation for the next 90 days, excluding China. For China, the US has raised tariffs to 125%.
“With significant capacity in India, Samsung can shift production away from Vietnam more quickly than others, helping it offset the impact of the new 46% tariff on Vietnam-made phones. Samsung has two factories in India and one of them has excess capacity, which can be scaled up. Further, if the South Korean government successfully negotiates with the US, some exports of premium models from Samsung’s South Korean factories will also see an uplift,” said Tarun Pathak, Research Director at Counterpoint Research.
Motorola, which also relies heavily on Chinese ODMs and international EMS partners, is in a relatively better position. It could benefit from shifting more production to Brazil—which faces the lowest tariff at 10% and is one of Motorola’s biggest markets—and to India, by leveraging Indian EMS partners who are likely to be key beneficiaries.
“OEMs experiencing healthy growth, like Google with its Pixel phones, will likely plan to shift manufacturing to alternative destinations such as India, depending on their ODM/EMS partners’ capabilities and capacities. Brands that have been manufacturing for US carriers and the prepaid market will be the most affected due to their strong dependence on the Chinese ecosystem. This opens up new opportunities for existing brands to expand and for newer brands to enter,” the report added.
The report also mentioned that smartphone brands like Apple, Motorola, Google, and other long-tail brands are at risk of being impacted by the high tariffs imposed by the Donald Trump administration on China. All these companies are now exploring strategies to mitigate the negative effects. The report noted that these new tariffs will directly affect the cost structures of smartphones sold in the U.S., potentially leading to higher retail prices and reduced consumer demand.
“OEMs which are seeing healthy growth, like Google with its Pixel phones, will likely plan to shift manufacturing to alternative destinations such as India depending on their ODM/EMS partners’ capabilities and capacities. Brands that have been manufacturing for US carriers and prepaid markets will be affected the most due to their strong dependence on the Chinese ecosystem, which opens up new opportunities for existing brands to expand and newer brands to enter.”