Apple’s move to diversify manufacturing outside China is driven by skills shortages in the U.S. and the need to manage supply chain risks. Policy tensions over tariffs and the role of India in production are also a key factor.

Cupertino

Apple's approach to international manufacturing was discussed in a recent interview with Adam Kovacevich, CEO of the Chamber of Progress. Kovacevich highlighted the challenges of shifting production away from China and emphasised that there are not enough American engineers or workers with the specific skills needed to manufacture products like iPhones and iPads in the United States. He noted that Apple's strategy of "friend-shoring"—diversifying production to countries with friendly trade relations, such as India and Vietnam—reflects both the need to reduce dependence on Chinese supply chains and the practical realities of the global workforce.

Discussion also touched on the relationship between Apple and former President Trump, whose administration sought to encourage U.S.-based manufacturing through tariffs. Kovacevich pointed out that while the Trump administration aimed to bring more manufacturing jobs to the United States, companies like Apple face significant hurdles in relocating production due to skills shortages and infrastructure requirements.

The conversation further addressed India’s growing role in Apple’s supply chain. While India presents opportunities for both manufacturing and services, Kovacevich and other participants agreed that the country does not yet possess the same level of infrastructure as China. Recent policy statements indicating no tariffs on products made in India may further encourage companies to expand production there.

Kovacevich concluded that current tariffs appear to have contradictory aims, balancing between isolating China and encouraging U.S. manufacturing. He suggested that while friend-shoring aligns with some policy goals, it is unclear whether there is a consistent overarching strategy guiding these moves.



Apple’s global production strategy faces skills, infrastructure gaps in U.S

So, how serious is Trump's problem with Tim Cook and which tech firms are in his good graces? Joining us by phone is Chamber of Progress CEO Adam Kovacovic. He is a pro-tech Democrat who previously led Google's U.S. policy strategy. Steve Kovac is here on set with us as well. Adam, welcome to you. And let's begin with what we thought was a very smooth relationship the first term and now not so much. Well, I think Apple has handled their relationship with Trump pretty well. I think this is a challenging issue. If you just zoom out for a minute, one thing that policymakers from both parties have been pointing out for years is the perils of becoming overly dependent on Chinese supply chains when we have shortages or pandemics, that's a problem. But it's also just strategically smart to diversify. As a result, I think one of the things you've seen is companies like Apple in recent years embark on something called friend-shoring, let's diversify production to countries where we have a friendly relationship, India, Vietnam, places like that. Now, even in those countries, there's a learning curve for training those workers to produce things like iPhones and iPads. But the reality is that there aren't enough American engineers or workers with the relevant skills to do that production in the United States. So Apple's strategy makes a lot of sense here. And I think that's where the competing goals of Trump's tariffs really clash. If we're trying to reduce our dependence on China, then it would make sense to have an allegiance alliance of non-China allies we could have. But if we're trying to reinvigorate U.S. manufacturing, we just need to be more pragmatic about which of the types of manufacturing we can more realistically bring back to the United States. And I don't think it's iPhone production. Right. See, we were talking about this, you know, a moment ago. But, you know, is that the president's goal or not? I mean, or is it simply the idea that he thinks are being a little too convenient by just shifting from China to India? We thought that maybe that was part of the goal here. It sounds like it's not. The goal is to build stuff here. I mean, he's said again and again and again that he wants to see iPhones built here. We've had a number of people from the Trump administration, whether it be Peter Navarro or Howard Lutnick, come on our air and say that's the vision for these tariffs is to encourage companies like Apple to bring their manufacturing over here. They also, by the way, this tidy relationship between Tim Cook and Trump did win Apple those exemptions from the worst of the Liberation Day tariffs still subject to the fentanyl tariffs, which is why they're still moving forward with these plans to build in India. And by the way, in those comments today that Trump made, he also said that we're going to have no tariffs with India, which makes it even more appealing for Apple to build there because it's going to be even cheaper to build there and get them out. They got to be. Exactly. I love India. I love the story, but they're not it. They're not China. They don't have the infrastructure yet. Well, they meaning India? India. Yeah. They don't have it. It takes time. And I think one of the things he also said was it's OK for Apple to build them in India if they're going to sell them in India. Which is why they started in the first place, which is what they were doing. So and I do think it's it's what our president does, right? It's a signal to Apple to say you're being watched and let's see where this goes. And it's all part of that grand negotiation. So we'll see where it goes. And I'm sure there'll be something that will be built here. Maybe it's not. But but I think that that was the way that the message was. Yeah. No, I just think as we were talking about yesterday, India was one of the big winners, it seems, in all of this. And I think might still be. But that's not going to be the whole story. It's certainly not going to be the end of the story. Does that put any other company think like of an on or companies with big India supply chain exposure, that kind of thing? And it's interesting, yes, India is really great with manufacturing, but it's also services also. So it's going to be a combination of both those where I think companies are going to benefit using smarter, cheaper labor in India. Adam, very quickly, do we have when do we have the ability to do this, you think, in India full scale? Well, I don't know, but you're absolutely right. We don't have that ability today. And I think, you know, the reality is that like China has made it really easy for Apple to do to produce iPhones there. And you said it. Apple would love a U.S. trade deal with India. Anything that makes it easier and smoother to produce phones in other countries in which I think a trade deal could do that, that's absolutely true. I think it speaks to the fact that like these the tariffs have multiple goals which are contradictory to each other. If it's trying to reinvigorate U.S. manufacturing, then you would provide no exemption to tariffs at all. Right. But that's clearly not the case. So, you know, I think that, you know, French shoring is a good strategy for achieving the goal of isolating China. But it's not clear that there's any consistency around that goal. All right, Adam, thanks for joining us today. Appreciate it. Adam Kovacovic with the Chamber of Progress. Steve, thank you as well. Our Steve Kovac.

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