Big Production, Bumper Sales: Apple’s Deepening India Presence

The huge reception Apple CEO Tim Cook received at the opening of Apple BKC retail store in Mumbai largely mirrored the numbers that the iPhone-maker has posted in the last two years in India, even as overall smartphone shipments declined globally.

Apple’s sales grew by nearly 50 per cent in the year through March, Bloomberg News reported on Monday. The Cupertino-based company’s revenue from India reached almost USD 6 billion as opposed to USD 4.1 billion in the year through March 2022, the report added, citing a person familiar with the matter.

Production Ramp In India

It's no secret that Apple, heavily impacted by the facility closures in China due to strict COVID-19 restrictions, changed its mindset around keeping its production focused in the country and started moving its facilities to India and Vietnam.

In fact, the company increased its production of iPhones in India, accounting for as much as 7 per cent of its global iPhone production volume in 2022. This number was up from about 1 per cent in 2021. Moreover, Apple assembled over USD 7 billion worth of iPhones in India in 2022 alone (according to a Bloomberg report).

The shipment volumes of iPhones in India in 2022 grew 60 per cent year-on-year, while their value increased by 162 per cent, according to a report by Counterpoint. The report also mentioned that Apple’s brand value share went up to 25 per cent in 2022, up from 12 per cent in 2021.

In a statement, Counterpoint Senior Research Analyst Prachir Singh said Apple’s EMS (electronics manufacturing services) partners Foxconn Hon Hai and Wistron were the fastest growing manufacturers among the top 10 in Q4 2022.

Incidentally, the overall growth of smartphone shipments in ‘Made in India’ smartphone shipments reached the highest ever in 2022 both in volume (20 per cent) and value terms (30 per cent), even as Apple’s production in the country grew. Samsung was the leader in Q4 as the top smartphone manufacturer, ahead of OPPO whose manufacturing shipments declined 31 per cent YoY due to inventory issues in the entry-tier segment.

“Samsung’s manufacturing shipments declined only 7 per cent YoY due to its stable export volume. Among the EMS players, Foxconn Hon Hai led the manufacturing shipments in Q4 2022, followed by Dixon,” explained Singh.

Considering that roughly 85 per cent of iPhones globally come from China, the recalibration in Apple’s production approach could severely dent the Asian superpower’s manufacturing dominance. A forecast by Taiwan’s DigiTimes Research mentioned that India could be assembling up to 50 per cent of all iPhones by 2027, which would put the production at par with that of China.

Apple In India, Since 2020

Apple has wanted to launch a retail store in India since 2016 but had failed to deliver on that vision. In 2020, the company finally launched its online retail store and clearly saw the market opportunity in India after the huge numbers it garnered throughout the COVID-19 pandemic.

During the earnings call in February, Apple CEO Tim Cook noted that the company had set a quarterly revenue record and grew in “very strong double digits year-over-year”.

“And so we feel very good about how we performed, and that was -- that's despite the headwinds that we've talked about. Taking a step back, India is hugely exciting market for us and is a major focus,” he said during the call. He also stressed that Apple was putting a lot of emphasis on the Indian market.

The company has had to tweak financing options too to make products more affordable in India and give consumers more options to buy. With local production setup and ramp in the country, this challenge would presumably prove to be easier to tackle in the near future.

Today, Apple manufactures iPhone 11, iPhone 12, iPhone 13 and iPhone 14 in India. The company is reportedly also looking to begin manufacturing AirPods in the country.

With the launch of retail stores Apple BKC in Mumbai and Apple Saket in Delhi, the Cupertino company is angling to get closer to the consumer in the world’s second-largest smartphone market and it is more than likely to win more customers in the quarters and years to come. Given the rise in the demand for premium smartphones among the middle class in India, the scenario would only get better for the iPhone-maker as the country’s per capita income increases year after year.