The growth of India’s population, consumer purchasing power, and appetite for Apple’s products make it fertile ground for the tech giant’s expansion.

Boyden's perspectives on the news and trends that are transforming industries

Apple opened its first official retail stores in India this year, in Mumbai and Delhi, to an enthusiastic welcome that demonstrated the popularity of the American company’s premium products in the country as well as its growing foothold there. At a recent meeting with Prime Minister Narendra Modi, CEO Tim Cook emphasized Apple’s commitment to India, the world’s second-largest smartphone market after China.

India has much to offer Apple, starting with the number of potential customers. Its population of more than 1.4 billion recently surpassed that of China, making India the world’s most populous country. This feat had been predicted for years, yet Apple’s market share in India was just 4.5% last year, according to research firm Counterpoint. This is changing rapidly as Indian consumers grow richer. Bloomberg reports that in March, Apple’s revenues in India increased by nearly 50% from a year earlier, to about $6 billion. Dan Ives, a senior analyst at Wedbush Securities, says that Apple’s Indian revenues could reach $20 billion in 2025.

Apple is drawn to India as a production hub as well. It started manufacturing products there in 2017. Ever since, the number of Apple manufacturers in India has grown and new suppliers have joined the local supply chain. These operations largely focused on the domestic market, but India is now seen as a potential export base. It is also being entrusted with more sophisticated products. While Apple previously used facilities in India to assemble entry-level or legacy devices, in 2022 it started assembling the iPhone 14 there.

Comparisons to China naturally arise, as Apple moved nearly all of its manufacturing there over the past two decades, and its vast, highly complex Chinese supply chain is entrenched. The ground started to shift in 2013, however, when Xi Jinping became President. Apple, like other Western companies, was forced to start making compromises with the Chinese Communist Party. By now the risks of doing business in China have heightened considerably for American firms, both politically and logistically.

Other Asian countries are benefitting from Apple’s apparent drift away from China as well. JPMorgan Chase predicts that by 2025, roughly 25% of all iPhones will be made outside China. Most will be assembled in India, but Vietnam is also making gains. Apple is believed to make nearly half its AirPod earbuds there. The company is now looking into making its MacBook laptops in Thailand, Nikkei reports.

Despite the relationships Apple is building in India and elsewhere, it should not be assumed that China will no longer have a considerable slice of the pie. Apple has been careful to dispel this notion. As The Economist notes, even in a worst-case scenario it would continue to manufacture in China for its huge domestic market, worth over $70 billion to Apple last year, and for some export.

It appears that China will remain essential to Apple, as it relies on the country’s supply chain ecosystem for its components, even as some final assembly moves elsewhere. As Anshul Gupta of Gartner points out, “There will always be some interdependence across these markets. You cannot just be completely decoupled.” At the same time, industry leaders and governments worldwide are reconsidering their overreliance on China. Apple will need to strike a balance between maintaining friendly relations and managing the risks.

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