The discovery of human induced pluripotent stem cells (hiPSCs) has advanced cell therapy by providing an unlimited source of pluripotent cells manufacturable under cGMP conditions. However, large-scale production for allogeneic therapies remains challenging due to issues of genetic stability, reproducibility, and scalability. To address limitations of 2D culture, we developed a physio-mimetic 3D culture platform (C-Stem™), which recreates a stem cell niche within microfluidic-generated core-shell capsules. We investigated the effects of extracellular matrix components, culture media, and small molecules on hiPSC growth and viability. Our results show that these factors significantly influence yield and cell organization in 3D, with responses differing from 2D cultures. Optimization of these parameters enhanced scalability and maintained cell quality, supporting the use of C-Stem™ for efficient, cGMP-compliant hiPSC production.