Tariff war impact: Smartphones, PC assembly lines may queue up for India

India to gain from China's decline in smartphone output: Report

India is expected to benefit from a tariff war between China and the US, with global smartphone and laptop/personal computer (PC) companies considering shifting part or more of their production from China to India.

 

Counterpoint Research estimates, based on discussions with global companies, that China’s domination in smartphone manufacturing will decline — with its share of global production falling sharply to 55 per cent by 2026 from 64 per cent in 2024 — if tariff impositions and tensions continue.

 

During the same period, India is expected to be a major beneficiary, with its share of global smartphone production rising from 18 per cent in 2024 to 25-28 per cent by 2026. A large part of this will be due to the ramping up of exports from India by Apple Inc, and also Samsung, especially to the US.

 

Apple iPhone exports from India, already 20 per cent of the company’s global production value, are expected to hit 25 per cent by 2025-26, and even reach 35 per cent by 2026-27.

 

In the laptop/PC global play, however, much will depend on how India can attract global brands, which currently import $21 billion worth of these products into the US — over 79 per cent of them from China. 

 

A fall in China’s share in this category is also expected. Counterpoint says China’s share of global laptop manufacturing could drop to 68-70 per cent by 2026 from 75 per cent in 2024.

 

A member of the Indian Cellular & Electronics Association who does not wish to be identified says: “Currently, we have less than a 1 per cent share of the global laptop value chain, worth $200 billion per year. We import most of our laptops and PCs, mostly from China. But if companies like Hewlett-Packard (HP), Dell, and others shift part of their production to India from China, we could replicate the mobile story.”

 

Such a move is already being supported by the production-linked incentive scheme for information technology products, which is expected to provide a further boost through incentives.

 

According to Counterpoint projections based on the current situation, India’s share of laptop production by volume, which was less than 4 per cent in 2024, could rise to 7 per cent by 2026. However, the change could be even more dramatic if the major global players shift a larger portion of their capacity from China to India, not just for the domestic market but also for exports.

 

But that shift will not be easy if one looks at Canalys’ latest report on the allocation of laptop production hubs by vendor and country between 2024 and 2026. In 2024, as much as 79 per cent of Dell’s laptop production was undertaken in China, and the rest in Vietnam. Canalys projects that by 2026, more than half of Dell’s production will move to Vietnam.

 

For HP, 85 per cent of its laptop production currently takes place in China, with the rest mostly divided between Taiwan and Mexico. By 2026, the share of Taiwan and Mexico is projected to rise to between 45 per cent and 50 per cent. Lenovo, which made 99 per cent of its laptops in China in 2024, plans to hedge by increasing exposure to Vietnam.

 

However, the two Taiwanese companies — Asus and Acer — which together hold a sizeable 23 per cent share of the US laptop market, have a different plan in which India plays a key role.

 

In 2024, China accounted for 98 per cent of Asus’ laptop production, and 94 per cent of Acer’s. The remainder for both was manufactured in India. By 2026, the share of production in India is expected to rise to 4 per cent for Asus and 8-10 per cent for Acer.