Apple's reliance on iPhone in India increases as other products witness sales fall

Apple and iPhone manufacturers benefited from the surging sales of the premium smartphone models, while other Apple products were declining, leading to a much higher dependence on iPhones for Apple's performance in India.

Unnamed sources told the Economic Times that Apple had generated over INR660 billion (US$8 billion) in sales in the first 11 months of fiscal 2024, which ended in March. It is expected that Apple may see revenue of more than INR700 billion in the fiscal year, up 41.94% year-on-year. Apple's profit in India in fiscal 2024 is expected to grow by 76% to INR22.29 billion.

IDC data shows that in the calendar year of 2023, Apple sold 9.24 million iPhones in 2023, up from 6.67 million units in 2022. Apple's performance starkly contrasts the overall smartphone market, which experienced a slight 1% shipment growth year-on-year in 2023.

Thanks to strong iPhone sales and production in India, the Economic Times reported that contract manufacturers such as Foxconn, Pegatron, and Wistron met the production target under the Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing and are set to receive incentives accordingly. Meanwhile, Rising Star, an Indian subsidiary of Foxconn, which makes smartphones for Xiaomi, has never managed to meet the production PLI target since the scheme was launched in fiscal 2021. Samsung Electronics, which met the target for fiscal 2023, is expected to receive the cash disbursement after failing to meet the target for fiscal 2022. Except for Dixon, local smartphone manufacturers like Lava and Optiemus are reportedly not eligible for the benefits under the scheme.

Notably, Apple's reliance on the iPhone is increasing in India as other Apple products did not sell well in 2023. The report, citing IDC data, reported that except for Apple Watch, which saw a 3% growth in revenue and sales in India, iPads, MacBooks, and Macs witnessed declining sales and revenue in India. iPhone's share in Apple's Indian revenue increased from about 85% to over 90%, while in the global market, about 50% of Apple's sales were generated by iPhones.

The Economic Times quoted Vikas Sharma, senior market analyst for wearables at IDC, contributing the weak Apple Watch sales in India to a lack of lucrative financing options for the wearable device. Most first-time iPhone buyers are still paying monthly installments for the iPhone.

Regarding the tablet and notebook markets, which saw weak demand over the past year, Akshara Bassi, senior research analyst at Counterpoint, said that iPads are priced more than the sweet spot of tablets in India at INr20,000, and MacBooks are about two times pricier than most notebooks sold in India.

Source: Registrar of Companies of India, Bloomberg, March 2024