For Apple, India is the new China: this is how the production of iPhones and Macs will change
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By mid-year, India will overtake China in the ranking of the most populous countries in the world: 1.428 billion inhabitants against 1.425. But only almost 600 million Indians own a smartphone: there is therefore an enormous margin for growth for a market that, after the boom of the pandemic, has returned flat if not in decline in the rest of the world.
Many have noticed it, for example OnePlus which has chosen New Delhi for the global launch of its top of the range OnePlus 11. And Tim Cook, who concluded a short Indian tour a few days ago dotted with appointments with authorities and institutions, including Prime Minister Narendra Modi. “We share your vision of the positive impact technology can have on India’s future: from education to developers, from manufacturing to the environment, we are committed to growing and investing across the country,” wrote the Cupertino CEO on Twitter and shared a photo of him shaking hands with Modi. Shortly after, the Indian premier said, again on Twitter, that it was an “absolute pleasure” to meet Cook. “I am delighted to exchange views on various topics and highlight the technological transformations taking place in India,” he wrote.
A growing market
Cook also opened the first two Apple Stores on the Indian subcontinent, in Mumbai and New Delhi. “India has a beautiful culture and incredible energy, and we are excited to build on our long history,” he said. The Cupertino company has been active in India for over 25 years, selling its products through authorized resellers and the website launched a few years ago. But regulatory hurdles and the pandemic have delayed the opening plans of a flagship Store. The new stores are a clear signal of the company’s commitment to invest in India, the world’s second largest smartphone market, where iPhone sales are steadily increasing. Between 2020 and 2022, Apple gained ground in the Indian smartphone market, rising from around 2% to around 6%, according to Counterpoint data. However the high price of the iPhone makes it unattainable for most of the Indians. Meanwhile, iPhone sales in the country have thrived among people with upper and middle incomes: Apple has captured 65% of the premium smartphone market, with prices starting at 30,000 rupees ($360). According to Bloomberg, in the year to March, Apple’s revenue in India was nearly $6 billion, an increase of about 50% from a year earlier, and could reach $20 billion in 2025.” India is an extremely attractive market for us,” Cook told investors in February. “Essentially, we’re taking what we learned in China years ago and putting it into practice.”
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Production unit
And not just for the consumer side: last September, Apple announced that the iPhone 14 would also be made in India. A victory for the Modi government, which since it came to power in 2014 has pushed to increase local production. The first iPhone produced in India was the SE model in 2017, and since then Tim Cook’s company has continued to assemble different iPhone models in the country. According to Counterpoint Research, India currently produces almost 13 million iPhones a year, compared to less than 5 million three years ago: more than double, but only about 6% globally, while China reaches 90%.
Indian Commerce Minister Piyush Goyal recently said the government is in contact with Apple to boost its business in the country. The company plans to make 25% of global production in India within five years: a goal not so far, considering the very low cost of labor and massive government subsidies.
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Geopolitics
China is becoming a dangerous place for American companies. First, political, as the two countries vie for technological supremacy, and a crackdown on TikTok, for example, could be met with equivalent sanctions for US companies. Another risk is logistical: Tim Cook has begun to evaluate the possibility of moving some production to Southeast Asia or elsewhere after repeated Covid-19 lockdowns have brought production lines to a halt and reduced the number of available iPhones , so they ultimately had a major impact on sales. With China out of the picture, the structures of other countries have grown: in addition to India, Vietnam, where Apple produces almost half of the AirPods headphones, and shortly Thailand, where the production of the new MacBooks should start shortly. And it is trying to bring some of its chip production to the United States, with the help of TSMC. So within a few years the geography of hi tech could be very different from what we have seen in the last two decades.
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