US Smartphone Growth Stalls, India Production Rises
- The US smartphone market saw minimal 1% growth in Q2 2025 as vendors pre-stocked devices.
- Meanwhile, India-made phone shipments surged, driven by supply chain shifts.
Shifting Supply Chains Amidst Tariff Concerns
The United States smartphone market experienced a modest 1% growth in the second quarter, according to research firm Canalys. Vendors opted to front-load their device inventories due to ongoing tariff concerns. Simultaneously, supply chain negotiations between China and the US spurred a significant increase in shipments of Indian-made phones. This reorganization of supply chains has become crucial for smartphone manufacturers. Companies aim to circumvent higher import costs and protect their profit margins.
China, a prominent center for electronics manufacturing, has been subjected to substantial tariffs. This has compelled hardware producers to investigate alternative Asian countries to maintain competitive production costs. For instance, Apple earlier this year sought to produce most of its iPhones destined for the US market in Indian factories. However, this action drew criticism from US President Donald Trump, who subsequently threatened additional tariffs on the company if it failed to increase domestic production.
India Emerges as a Key Manufacturing Hub
India emerged as the leading manufacturing hub for smartphones sold in the US during Q2 2025, a significant first for the country. This shift was largely propelled by Apple’s accelerated move of its supply chain to India. This strategic realignment occurred amidst an uncertain trade landscape between the US and China. Despite vendors pre-stocking inventory, the market’s mere 1% growth indicates lukewarm demand within a challenging economic environment. A widening gap between units shipped into the market and actual sales to consumers is also evident.
The share of US smartphone shipments assembled in China dramatically decreased from 61% in Q2 2024 to just 25% in Q2 2025. India absorbed the majority of this decline, with the volume of Indian-made smartphones growing by an impressive 240% year-on-year. While iPhone shipments declined by 11% during the second quarter, Samsung shipments, in contrast, experienced a healthy 38% growth.
Implications and Market Dynamics
The data highlights a significant realignment within the global smartphone supply chain. Manufacturers are actively de-risking their operations by diversifying production away from China. This trend reflects ongoing geopolitical tensions and the strategic importance of mitigating tariff impacts. While the immediate effect on US market growth has been modest, the shift in manufacturing origins represents a profound change for the industry.
This diversification could lead to more resilient supply chains in the long term. However, it also presents new challenges related to infrastructure development and skilled labor availability in emerging manufacturing hubs. The increase in Indian-made phones suggests a growing capacity and capability within the country’s electronics manufacturing sector. This could further solidify India’s position as a critical player in the global technology landscape.
