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Apple, whose sales in the Chinese market continue to decline, is becoming increasingly popular in India.

The latest data shows that in the 12-month period ending in March 2024, Apple's revenue in India increased by about 33% from $6 billion in the same period last year to nearly $8 billion, making India one of Apple's fastest growing markets in the world. Among them, the iPhone accounts for more than half of sales.

Apple previously did not list India's revenue separately in its financial reports, but Indian law requires Apple to report annual sales to the local government, which gave the outside world a glimpse of Apple's substantial growth in the Indian market. The success of the Indian market shows that the purchasing power of Indian consumers is gradually increasing, and Apple's revenue sources are more diversified. Currently, Apple is handing over more mobile phone assembly business to Indian factories, and Apple also operates two flagship stores in the country.

"India has become a key market for Apple, helping to mitigate declining sales from key markets such as China and the United States. The market mainly drove Apple's sales through previous generations of iPhone models." Canalys' Indian market analyst told Titanium Media APP that India is experiencing a high-end trend driven by affordability, accessibility and desire appeal.

iPhone 14 is "selling like crazy" in India

"Apple did achieve strong double-digit percentage growth in the Indian market in the second quarter of fiscal 2024, with sales reaching an all-time high. I think the Indian market is a very exciting market and a major focus for us."

Apple CEO Tim Cook said in a previous earnings conference that Apple's growth in the Indian market is related to its retail strategy. Last year, Apple opened several retail stores in India, and this year it will continue to expand its channels and work to develop a developer ecosystem.

According to IDC data, the Indian smartphone market shipped 34 million units in the first quarter (Q1) of 2024, an increase of 11.5% year-on-year, which is the third consecutive quarter of growth. Compared with the same period last year, Samsung's market share in India lost nearly 13%, while Apple's market share increased by 19% during the same period.

"Apple is very attractive to young people in India," the above-mentioned Indian analyst told Titanium Media APP. Online, the financial options of various platforms make it easier for consumers to buy high-end devices such as iPhones. At the same time, with the opening of Apple stores in India, the offline purchase channels for iPhones have also expanded.

A deeper analysis of the reasons for Apple's market share growth reveals that older iPhones have become the main driving force behind Apple's growth.

In the first quarter of this year, India shipped about 23 million 5G smartphones, and the share of 5G smartphone shipments increased to 69% from 46% in the first quarter of 2023. In the 5G market segment, Apple's iPhone 14 became one of the 5G models with the highest shipments in the Indian market this quarter.

In fact, older iPhones have long been the best-selling Apple products in the Indian market. For example, in 2019, Apple was still promoting the iPhone 6s, which was launched in 2015, in India.

As one of the world's largest smartphone markets, India is still a developing country. Public data shows that the median annual income in India is only $1,265, and 90% of the country's people earn less than $3,900. This has led to the fact that older models from a few years ago are more popular among Indian users due to price issues.

Local manufacturing continues to pave the way for Apple in India

In addition to selling more older iPhone models, Apple's local production line in India is also the key to the company's continued development in the Indian market.

Currently, Apple has outsourced the manufacturing of iPhone cases to the Indian company Tata Electronics. Tata Electronics is doubling the capacity of its iPhone case factory, covering 500 acres, with about 20 assembly lines, planning to employ about 50,000 workers, and an initial investment of more than $600 million. The new factory is expected to be put into operation by the end of 2024 for the production of iPhone 17.

In addition, Apple's original suppliers, such as Foxconn, Pegatron, Sipro Technology, and TDK, have also been asked to expand production in India to meet future orders. Japanese supplier TDK said it "has begun building a battery production plant in India" and plans to start operating it in 2025.

"Last year, Apple's manufacturing plants in India produced 13% of its global output. By 2025, 25-30% of Apple's global shipments will be manufactured in India," Canalys analysts told Titanium Media APP.

Through this local manufacturing method, Apple avoids taxes and fees on imports from China. Rushabh Doshi, research director of Canalys, once said: "Local production will provide Apple with ample room to determine the profits of dealers and indirectly reduce the price of mobile phones." This also means that Apple's market share in India will continue to expand under various forms of cost reduction measures.

An industry insider engaged in venture capital in India once revealed to Titanium Media APP that "Make in India" is India's national strategy, which is mainly implemented through two strategies.

One is a phased manufacturing plan. For example, in the early stage of the mobile phone industry, the Indian government attracted Chinese mobile phone brands such as Xiaomi, OPPO, and vivo to enter the Indian market through various policy incentives. After the brands entered, India would gradually increase the tariff rate of mobile phone parts and components, allowing the foreign mobile phone supply chain to gradually move to India. After several years of development, India has a relatively complete mobile phone supply chain.

The other is the industry production incentive plan. India has currently introduced relevant economic incentive plans for more than a dozen industries, including semiconductors, new energy vehicles, solar photovoltaic modules and white goods. India's Modi government has proposed to strive to achieve a turnover of 400 billion US dollars in the electronic system design and manufacturing value chain by 2025, and to make India a global leader in the electronic manufacturing service industry by further increasing the added value of electronic product manufacturing.

Now, Apple's local production line has become an important goal in India's national strategy. Indian government sources said that Apple plans to expand its production scale in India by more than five times to about US$40 billion in the next four to five years. By 2025, Apple will turn India into a global iPhone manufacturing center. (This article was first published on Titanium Media APP, author | Rao Xiangyu Editor | Zhong Yi)