Status: 04/18/2023 2:39 p.m
Apple is opening its first store in India – and is likely to focus more on the country in the future. That could help the US company reduce its dependence on China.
It is CEO Tim Cook himself who opens the branch doors of the first Apple store in Mumbai, India. Hundreds of people attend the opening; in classic Apple fan fashion, some of them have already queued up in front of the store during the night.
Even before the opening, the group spoke of a “major expansion” in India – and in a few days another store in the capital New Delhi will open its doors. Apple not only hopes for consumer enthusiasm in India, but also sees further potential for manufacturing facilities and businesses in the large country, also in order to become less dependent on China; After all, the company once closed its own factories and outsourced production to external service providers, who mainly produce in China.
Covid lockdowns led to production losses
This dependency has recently caused the company to run into difficulties because the strict Covid lockdowns in China had paralyzed the contract manufacturers working locally. At the end of November, violent clashes broke out at the Foxconn factory in Zhengzhou when workers protested against the strict corona restrictions and for better pay. This led to production losses at Apple, because the plant in Zhengzhou, with up to 300,000 employees, is one of the group’s most important production sites.
Production at the Foxconn plants is now up and running again. However, the tensions between China and Taiwan could also have consequences for Apple. On the one hand, Foxconn has its headquarters in Taiwan, and on the other hand, Apple obtains a not inconsiderable proportion of its chips from there. One more reason to become less dependent on China, and the company has been looking for alternatives for a long time. The iPhone manufacturers Foxconn, Wistron and Pegatron now produce Apple phones in India for export and the domestic market.
Market share in India only four percent
In India, Apple is rapidly gaining market share and could expand this in the current year, from currently four to five percent, as the data analyst Counterpoint Research estimates. That would still be a fraction of the market share in China, which was around 22 percent in the final quarter of 2022. So Apple won’t be doing without China any time soon, but India seems to be a useful additional mainstay for the tech group.
The Bloomberg news agency reports that Apple had iPhones worth around seven billion dollars produced in India in the past fiscal year, citing insiders. That is about three times as much as in the previous year. According to Bloomberg, around a quarter of all Apple smartphones could be manufactured in India by 2025. India is becoming more and more exciting for Apple not only as a production location, but also as a sales market, as India only recently overtook China as the most populous country in the world.
iPhone still too expensive in India
There are more than 600 million people using smartphones in India. Devices with the Google Android operating system still dominate the market at the moment. Although Apple is one of the top 3 smartphone brands in India, the iPhones are affordable for only a few people because of the high prices. Should more smartphones and computers from the US group be manufactured in India in the future, local prices could drop.
Apple has been offering its products online in India since 2020. However, the opening of a real branch had been postponed again and again due to the applicable investment rules and pandemic-related restrictions. The California company has developed into one of the most profitable and largest companies in the world over the past decade. In fiscal 2022, Apple made a profit of around $99.8 billion.
The iPhone is Apple’s flagship product. In fiscal 2022, Apple sold around 238 million iPhones, down slightly from the previous year. Nevertheless, iPhone sales are responsible for a large part of the tech group’s revenues. This can also be seen from the fact that Apple’s annual sales have increased more than tenfold since the iPhone 2007 came onto the market.