India to be growth engine for Apple

Apple launched its first retail store in India, marking the beginning of an era when Apple is shifting more focus from Greater China to India, where Apple sees hope in the rising middle class and an emerging electronics manufacturing ecosystem.

Apple CEO Tim Cook visited India on April 18 and is scheduled to meet with India's prime minister Narendra Modi and several ministers, including Ashwini Vaishnaw, India's telecom minister, and Rajeev Chandrashekar, the minister for IT of India.

The Economic Times quoted Cook saying that India is at a tipping point with its vibrancy, dynamism, and feeling that anything here is possible, adding that Apple is trying to bring its best to India. Apple opened the Apple BKC in Mumbai on April 18 and will open another Apple Saket store in Delhi on April 20. These two stores are Apple's first self-owned retail stores in India after it opened its self-owned online store in India in 2020.

Despite a plateauing demand for smartphones and PCs as well as global inflation that hit the disposable income of the mass consumers across countries, Apple is still seeing its consumer electronics sales grow rapidly in India, the world's second-largest smartphone market and Asia's second-largest PC market, especially when Greater China, which accounts for about 20% of Apple's annual sales, seems to be losing momentum.

Statistics show that over the past several years, India's share in Apple's sales has been rising from its low of 0.5% in fiscal 2019 (April 2018 to March 2019) to 1.05% in fiscal 2022, and is estimated to be on its way to reaching 1.6% with US$60 billion, sources told Bloomberg. Furthermore, IDC's data shows that in India, where Android has about 95% of the market share, iPhone's share has been increasing over the past quarters.

Apple is viewing India as the next China. CNBC reported that with an expanding middle class and a home base for the production of Apple products, India could replicate the role China has played in Apple's business for the past 15 years. Apple opened its first retail store in China in 2008, when China accounted for about 1% of Apple's annual sales before its share jumped to more than 10% in just two years.

Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a research note that iPhone sales could climb 17% a year for the next decade, reaching US$30 billion, compared with around US$6 billion at the end of 2022 thanks to India's rising middle class who may switch their phones to more expensive iPhones.

Despite the symbolic significance of Apple's opening of two retail stores in India, Bloomberg Intelligence analysts believe that Apple's expansion of monthly payment plans through carriers and banks and a potential new subscription program will likely have a much greater impact on sales.

Meanwhile, unnamed sources told The Economic Times that Foxconn may expand its manufacturing facility in Chennai and is looking to set up an R&D center in Whitefield, Bengaluru, adding that there may be at least two more buildings for making iPhones.

Source: Registrar of Companies, Apple, Bloomberg, compiled by DIGITIMES Asia, April 2023

Source: IDC, compiled by DIGITIMES Asia, April 2023