Apple Considers Shifting iPhone Chip Assembly to India for the First Time

Technology – Supply Chains

Apple has entered preliminary discussions with Indian semiconductor companies to locally assemble and package some components used in iPhones, a first for the company in this area, according to a report by Economic Times cited by Reuters.

This move represents a potential shift in Apple's strategy, relating to chip assembly and testing (OSAT), a higher-value phase in semiconductor manufacturing compared to final device assembly.

Companies and Components Under Consideration

According to sources, discussions have included CG Semi, part of the Murugappa Group, which is establishing a chip assembly and testing facility in Sanand, Gujarat, supported by the India Semiconductor Mission. The factory is expected to start commercial production in 2026.

Sources indicated that display-related chips - such as display driver ICs (DDIC) - could be among the first components included in this initiative, should it proceed. These chips are currently packaged in South Korea, Taiwan, or China.

Preliminary Talks Without Final Agreement

Sources confirmed that the discussions are still in the early exploratory stage, with no binding agreement reached yet, emphasizing that any future cooperation will depend on Indian factories meeting Apple's stringent quality standards.

Wider Context: Reducing Reliance on China

This step aligns with Apple's ongoing efforts to diversify its supply chain away from China, amid geopolitical tensions and risks associated with U.S. tariffs. The company aims to have most iPhones intended for the U.S. market manufactured in India by 2026.

India is already a significant hub for iPhone assembly, with companies like Foxconn, Pegatron, and Tata Electronics exporting devices to global markets. However, transferring chip packaging operations would mark a significant leap for India towards higher value-added stages in the electronics manufacturing chain.

Potential Gains for India… and Ongoing Challenges

For India, this move supports government objectives to build a local semiconductor sector, as part of incentive programs like PLI, which offers up to 50% support for project costs. These developments follow recent partnerships, including Intel's collaboration with Tata Electronics in chip packaging.

Analysts believe this step could enhance Apple's supply chain resilience and support the growth of the tech ecosystem in India, though they also point to challenges related to skill development and infrastructure before achieving widespread expansion.

These developments come as India seeks to establish itself as a global electronics manufacturing hub, with local iPhone production accelerating, including all models of the iPhone 16 being manufactured locally and trials for the iPhone 17 starting.