Apple: 'Once-in-a-lifetime opportunity' for India

From Yvonne Lau's "How a mass lockdown at the world’s biggest iPhone factory is India’s big chance to beat out China as Apple’s favorite supplier" posted Saturday by Fortune:

After the latest Zhengzhou lockdown, Apple asked a second supplier—Taiwan’s Pegatron—to start cranking out its latest iPhone model in Tamil Nadu, according to a Bloomberg report. Foxconn now plans to quadruple its India workforce in the next two years to 70,000, says a Reuters report...

The Modi government has recognized the current moment as a “once-in-a-lifetime opportunity” to sway global companies as China’s zero-COVID strategy rattles their supply chains, Akshobh Giridharadas, adviser at business advocacy group U.S.-India Strategic Partnership Forum, told Fortune. “India has limited time—and [Narendra Modi] realizes that. The government is fast-tracking policies that will give India an advantage as companies increasingly diversify their supply chains,” he said...

Analysts now expect a bigger and quicker-than-expected iPhone production shift to India. In September, JPMorgan analysts predicted that India could produce 5% of Apple’s iPhone 14 inventory and 25% in three years. Ming-Chi Kuo, an Apple-focused tech analyst at Hong Kong–based TF International Securities, said last week that the Zhengzhou lockdown prompted Foxconn and Apple to accelerate iPhone production in India. Kuo expects iPhones made in India—still by Foxconn—to grow by at least 150% next year.

“Foxconn’s medium- to long-term goal is to ship 40% to 45% of iPhones from India, versus the current 2% to 4%, meaning Foxconn’s iPhone production capacity in India will increase rapidly in the next few years,” Kuo suggests.

[Counterpoint Research's Tarun] Pathak believes that Apple “can scale in India” with iPhone production in the country likely to double next year. But he argues that India contributing half of all iPhone assembly worldwide is an “ambitious” goal owing to China’s still-outsize role in the iPhone supply chain and stiff competition from other emerging markets.

My take: Different country, different culture. The transition is likely to be bumpy.

9 Comments

  1. David Emery said:
    “My take: Different country, different culture. The transition is likely to be bumpy.”

    Yeah! Tim Cook has decades of experience with China. He has to keep an open mind on India.

    1
    November 13, 2022
  2. Gregg Thurman said:
    Cultures have a tendency to be flexible when money is involved. Look at Shanghai and Ho Chi Minh City (formerly Saigon).

    2
    November 13, 2022
  3. Fred Stein said:
    Great news.

    We’re at the ‘knee of the curve’ in three ways, more tech manufacturing in India, more purchasing of Apple (and other foreign tech products) in India, and cultural acceptance of these trends.

    What was once exploitation, now becomes empowerment.

    2
    November 13, 2022
  4. Bart Yee said:
    From Hindustantimes, mid Sept. report Sept. 10, 2022:

    tech dot hindustantimes dot com/tech/news/iphone-sales-likely-to-be-around-7-million-in-india-in-2022-techarc-71662715567060.html

    “Sales of premium smartphone iPhone are likely to be a little over 7 million in India this year, market research and analyst firm Techarc said on Thursday.

    iPhone user mark is expected to cross 20 million this year, the firm said.

    “Even though, iPhone is not a mass market smartphone, it has still enjoyed remarkable love and acceptance in India. Since its official launch in 2008, when just a little over 50,000 iPhones were sold in the country, today the iPhone is set to sell a little over 7 million smartphone units by the end of 2022,” Techarc said.

    According to the firm, the iPhone added 10 million users in the last six years.

    “The cohorts of frequent international business travelers and NRIs have a higher penetration of iPhones. At the same time, the states and union territories of India which have a significant population working outside the country also have a higher proportion of iPhone users.”

    “The very high aspirational value of the iPhone is driving the gradual but steady switch from Android smartphones to iPhones. Currently, only a foldable smartphone form factor is something that can help Android ecosystem to retain its users in the ultra-premium category, which is a blend of productivity and uniqueness, adding to the personality of the users,” Techarc said.

    Techarc said that a total of around 162 million smartphones are expected to be sold in India in 2022.

    The research and analysis firm said that iPhone has captured over 80 per cent of the ultra-luxury segment where Samsung is the only other major brand while others including OnePlus, OPPO, Vivo, Xiaomi and Google are attempting to carve their market pie.“

    I assume NRIs to be non-resident Indians, a major number of these being US, UK, EU, Asia and other international locales based. India’s Apple influence is vast.

    1
    November 13, 2022
  5. Bart Yee said:
    So if we use the above numbers of 6-7M iPhones sold in India, that represents 4% of the 172M smartphones sold in India. Tellingly, most iPhones would be considered high end except the SE. Assuming higher end iPhones are conservatively 75% of iPhones sold, that would give 5.3M high end iPhones. If that number is 80% of total high end sold, then the high end India market is about 6.6-7M total, Samsung comprising the rest mostly. If we assume an average India iPhone sales price of ~$600 for now, that would translate to $4.2B USD in annual sales. It’s unclear if there is an imported or gray market used iPhone market.

    So currently, the high end India Market is only at best 4-5% (about 7-7.5M units) of the total market, but certainly that will grow as their economy grows, iPhone popularity increases, aspirational demand increases, and supply ramps up. Just as we’ve seen in general, introduce iPhone (and other Apple products) to an eager population with means and affordability, and growth is, if not exponential for now, high linear to geometric.

    With “just” 20M installed base in India plus international Indian “brand ambassadors” frequently traveling to India and extolling Apple Product virtues, no wonder Tim and Luca emphasized “strong double digit (revenue) growth” in India, Indonesia, Vietnam, Mexico/Latin America.

    Apple is on the cusp of a huge breakout and growth in these regions.

    1
    November 13, 2022
  6. Jerry Doyle said:
    China is an authoritarian run country. India is the most populous democracy in the world. Assembling iPhones in China is tantamount to vaqueros & cowboys herding cattle. Things run pretty smoothly, most of the time. Doing similarly in India will be like herding cats. Keep that in mind.

    0
    November 13, 2022

Leave a Reply