Apple years away from diversifying from China despite India expansion
Apple’s first physical retail store is located in the populous city of Mumbai.
Punit Paranjpe | Afp | Getty Images
For years, Tim Cook has been bullish on India. Now, he’s betting big on the South Asian giant as Apple shifts its focus away from China and expands its footprint in India.
Still, analysts told CNBC the iPhone-maker’s dependency on China will remain for years to come.
There’s potential for India to “become the next China” for Apple production, but it could take as long as a decade before it happens, said Martin Yang, senior analyst of emerging technologies at Oppenheimer & Co.
Apple is set to open its second India retail store in Delhi Thursday, two days after opening its first in Mumbai.
The Cupertino-based tech giant still has a strong presence in China due to its supply chain partners, and China’s infrastructure capabilities are still far better than what India can offer, Nitin Soni, senior director at Fitch Ratings told CNBC.
“It will take Apple years to diversify away from China,” Soni said. “The country is still a very large pocket for Apple — not just in the assembly line, but the semiconductor ecosystem and testing as well.”
Apple’s efforts to move its assembly of products from China became more urgent in the last five years as U.S.-China trade tensions intensified, and supply chain disruptions caused by Beijing’s zero-Covid policy unraveled. The iPhone maker had to scale back production in China due to those restrictions, a move that hurt its bottom line.
The population growth and pure opportunity around India is the golden goose for Apple.
Dan Ives
Wedbush Securities
It is also highly unlikely that Apple will be able to completely eradicate its reliance on China, said Navkendar Singh, an associate vice president with International Data Corporation (IDC) India.
“Given the cost scales, logistics, and sheer inertia of some of the suppliers in the ecosystem in China, it’s very unlikely that Apple can completely remove itself from China,” Singh highlighted.
Nevertheless, Apple’s growth in India has only just begun and numerous opportunities await in both manufacturing production and retail sales in the country.
Apple’s ambitions for India
India is the second largest smartphone market worldwide for annual shipments and sales, accounting for almost 12% of the global market, according to data from IDC.
According to the market intelligence firm, Apple shipped 6.7 million iPhones in 2022 from India, a surge from 4.8 million devices in 2022. It stands at the sixth position after the U.S., China, Japan, U.K., and Germany for global iPhone shipments in 2022.
“The population growth and pure opportunity around India is the golden goose for Apple. It’s been a difficult market to ramp for Apple on the iPhone front over the years but now is clearly starting to find its stride,” Dan Ives, analyst at Wedbush Securities, said.
The technology giant currently manufactures 5% to 7% of its iPhones in India, a leap from just 1% in 2021 — and there’s…
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