Apple: India Takes Center Stage

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Apple: India Takes Center Stage

September 30, 2020 | technology | No Comments

As the tension between the US and China shows no sign of being put to rest any time soon, another Asian country takes a step closer to the spotlight. Over the past couple of weeks, India has surfaced a couple of times in Apple’s newsfeed:

  • Production ramp up: although still officially a rumor, thee of Apple’s key parts suppliers and assemblers are expected to invest $900 million in production capacity over the next 5 years. This would be the result of a $6.7 billion Indian government incentive program to boost the country’s smartphone manufacturing capabilities. Reuters reports that most of the funding would be used to expand iPhone production.
  • Online store goes live: now that local regulatory requirements have been met, Apple has opened its online store in India. The go-live date was September 23. Through the store, consumers in India will be able to use financing options and trade-in programs, and students will have access to discounted pricing on certain devices and services.

Untapped opportunity

Both pieces of news are encouraging, on the supply and demand sides. Regarding demand, the two side-by-side graphs below give a sense of how much revenue growth Apple may be able to generate in the country.

First, smartphone sales in India continue to increase at a consistent pace of about 10% per year, well above the global average. Second, iOS is a far second to Android in the smartphone operating ecosystem. Gaining just a bit of market share could mean a substantial boost to revenues in the region.

Regarding supply, expanding production ties with India is a key move in the broader strategic move to diversify away from China. Nearly half of Apple’s top suppliers are still in the Far East, but India has shown interest in being the production alternative. Ramped up manufacturing could help to solve not only the global supply problem, but also meet local demand.

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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)

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