India's iPhone Market To Surpass China By 2030?

It’s no secret that Apple has been significantly ramping up its focus on India in the aftermath of Covid and facility-related disruptions in China. But the heightened focus on the Indian market in 2023 yielded remarkable results, with the company’s revenue surging to USD 8.7 billion, a year-on-year (YoY) growth of 42 per cent, as per analysts at Morgan Stanley. 

According to Morgan Stanley analysts’ note, India’s current market size alone is insufficient to compensate for the decline observed in the Chinese market. But these analysts anticipate that the Indian market to expand its contribution from USD 6 billion in revenue to USD 40 billion over the next decade. The firm also stressed on a crucial observation: should India maintain its growth trajectory while Chinese iPhone shipments remain stagnant, India could potentially surpass Chinese iPhone market by 2027.Source: IDC, Morgan Stanley EstimatesBut such a change would require a massive dip in China iPhone numbers and an effort on Apple’s part to revamp its supply chain, which still heavily relies on China despite looking at manufacturing and assembling locally in multiple locations, including India.

To provide context, India’s share of iPhone global shipments and revenue rose to 4 per cent in 2023, up from 3 per cent in the previous year and a mere 1 per cent five years ago. In contrast, Chinese iPhone shipments accounted for 20 per cent of total iPhone shipments and revenue in the same period, a slight decline of 1-2 points YoY.

Speaking on Indian iPhone market becoming larger than the China market by 2030, Sanyam Chaurasia, Senior Analyst at Canalys, said, “I don’t foresee such a scenario occurring because the US remains Apple's primary market, boasting an annual shipment volume of approximately 78 to 80 million units. China follows closely behind, with figures around 52 million units last year and a similar volume this year, approximately 51.8 million. Comparatively, India’s current shipment volume stands at ~8.0 million units, according to our data. The current growth for Apple is driven by Availability, Affordability and Aspirational value.” 

Chaurasia believes that Apple’s iPhones have benefited greatly from the premiumisation trend in the Indian smartphone market. However, he anticipated this growth trajectory to eventually plateau as the premium segment extends the device replacement cycle. He said that this trend is likely to persist unless there are groundbreaking innovations introduced in the future to reignite consumer interest and drive adoption.

“... it’s unlikely that India will experience a significant surge by 2030 to surpass China as a bigger market for iPhones.” – Sanyam Chaurasia, Senior Analyst at Canalys

Interestingly, despite the challenging overall environment in the China market, Apple became the leading smartphone company in China for the first time with record high market share of 17.3 per cent in 2023, ahead of Honor at 17.1 per cent (as per IDC).

Growth In India

Apple held 23 per cent share of Indian smartphone market revenue in 2023. This achievement is noteworthy considering the company’s relatively modest market share by volume, standing at approximately 6.5 per cent – its highest to date, according to a Counterpoint report. In comparison, Samsung secured 18 per cent volume share and a 21 per cent revenue share, while Vivo trailed behind with a 13 per cent share of revenue. The company reportedly recorded in excess of 50 per cent YoY growth in smartphone shipment.

In October 2023, Apple disclosed that its India operations achieved a revenue of Rs 49,300 crore (about USD 6 billion) in FY23, an increase of 48 per cent from the Rs 33,300 crore (USD 4.03 billion) recorded in FY22. According to Registrar of Companies (RoC) filings, Apple India derives 94.6 per cent of its revenue from product sales and 5.4 per cent from maintenance and services. Further, the company experienced a significant surge in net profit, which soared by 76 per cent to Rs 2,229 crore in FY23 from Rs 1,263 crore in FY22, as per the filings.

“Given the premiumisation trends we have been observing in India post Covid with the rich becoming even more affluent and Apple’s status as the aspirational brand for the affluent, the sales for iPhones will continue to show an upward trajectory. And now, with the tag of being the most populous country in the globe, India stands a chance to become one of Apple’s key growth drivers in the future with its flagship iPhone brand.” – Vivek Gupta, Managing Director (Research), Ipsos India

Ipsos' Gupta, speaking to BW Businessworld, highlighted Apple’s strategic decision to prioritise India by manufacturing the latest iPhones within the country. He explains that this move is in alignment with India’s ‘Make In India’ initiative, demonstrating Apple’s concrete commitment to the mission. By doing so, Gupta said, Apple not only enhanced its acceptance and visibility in India but also catalysed its growth ambitions in the region.

Moreover, Gupta pointed out the significance of India’s large population and the increasing affluence and influence of its people. He stressed that as India gains prominence on the global stage, Apple views the country as a critical market for its growth, recognising the potential of Indian consumers as a key target demographic.

What Next?

Apple experienced a remarkable year in 2023, with sales reaching almost 10 million units, despite commanding the highest average selling price (ASP) of USD 950 – highest among all smartphone brands. This performance was primarily driven by strong demand for previous generation iPhone models and the company’s emphasis on local manufacturing. Both the iPhone 13 and iPhone 14 secured positions among the top five shipped models annually, underlining Apple’s continued market dominance and consumer appeal.

Upasana Joshi, Research Manager at IDC India, said there are several factors driving Apple’s growth in India. These include Apple’s focused efforts in the Indian market and a preference among Indian consumers for previous generation iPhones, often due to discounts and the absence of a telco-driven market. “Local production in India has also played a pivotal role in driving down the effective prices of previous generation iPhones. Notably, while the basic variants are manufactured locally, the Pro and Pro max devices are imported. Retail strategies, including the proliferation of Apple stores and partnerships with e-tailers like Flipkart and Amazon, have further fueled iPhone sales. During sales festivals, where prices are significantly slashed, these e-tailers witness a massive surge in iPhone purchases,” Joshi said.

Additionally, the availability of no-cost EMI plans, extended to up to 30 months, has provided further impetus to iPhone sales.

The Indian smartphone market’s growth was almost flat in 2023, growing a mere 1 per cent. IDC says the growth will be around 3 per cent to 5 per cent in 2024. However, the premium segment, which grew nearly 80 per cent last year, is not expected to perform the same way in the present year. “I do not expect the premium segment to show the same type of growth in 2024 because of the macroeconomic situations that are hovering right now and there is an upper ceiling to premium devices because the devices every quarter are only getting costlier and not getting any cheaper,” explained Joshi. 

This would mean that a lesser growth in premium segment may impact Apple too. However, all the analysts BW Businessworld spoke to expected the Cupertino-headquartered company to record at least a ‘double-digit’ growth in the present year. An analyst, on condition of anonymity, said that the expectation from Apple was to ship at least 12 million to 13 million iPhones in 2024.