Why Apple Is Betting Big On Making iPhones In India

It took seven years for Tim Cook to visit India again after traveling to the fast-growing country in 2016. Last April, the Apple CEO visited New Delhi and Mumbai to open two flagship stores, one in each city.

"Apple CEO Tim Cook actually traveled to India earlier this year to be in attendance for the opening of those two stores out in India, largely because of the massive opportunity that he sees out in India," said Angelo Zino, a senior analyst at CFRA Research. "In many respects, we are believers that India is going to represent a similar opportunity to China, and they also kind of represent very similar markets in nature."

Apple has been manufacturing older models of iPhones in India since 2017. In 2022, Apple began making the iPhone 14 in India, which was seen as a big shift in its manufacturing strategy. That year, about 3.5% of the world's iPhones were made in India. Apple eventually wants to manufacture 25% of the world's iPhones there.

"The major factor behind Apple's decision to diversify their production was they saw the impact of some of these disruptions in China that had to do with their Covid zero policy and a recognition of how vulnerable they were if they didn't have kind of a broader supply base, " said Willy Shih, Professor of Management Practice at Harvard Business School. "Without that broader supply base, they had production shortfalls which impacted their sales, which they might not have suffered as much had they had multiple sources."

Moving more iPhone manufacturing from China to India sounds like a good idea on paper. In the real world, it's plagued with serious challenges — finding talent, building out infrastructure and navigating a patchwork of regulations. Apple declined to CNBC's request for comment.

Watch the video above to find out why Apple is betting on India and the challenges it faces as it slowly shifts its manufacturing base from China to India.

Chapters:
00:00 — Introduction
01:22 — The iPhone economy
02:30 — Apple’s shift from China to India
05:40 — The Indian smartphone market
07:25 — What’s next?

Produced and Edited by: Anuz Thapa
Animation: Midnight Snacks
Supervising Producer: Jeff Morganteen
Additional Footage: Getty Images, Apple, Narendra Modi

About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

Connect with CNBC News Online

#cnbc

Why Apple Is Betting Big On Making iPhones In India

[heyaswinp]

You can buy a decent mid-range phone in India at the price of AirPods. Apple can never be the number one in India, the economics will never work. But because of the scale, it will be still a big market for Apple.

[londresparis_]

Because of geopolitical tensions between the US and China. There you go, I saved you 10 minutes

[kyungshim]

It's interesting how Apple relies so much on Samsung even though Samsung makes products that directly compete with iPhones.

[_GMP_]

Made in India iphones are cheaper in USA than India

[Yang_Mulia]

most indian person i know use android not only because it's cheap but can easily mod, and can replace PC if they don't own one, it something that's apple differently lacking

[madinmex]

I am from the UK. For some time now I have been greatly impressed with India (love their music) but what has been obvious is their adaption to technology. I read an article the other week that suggests that in the next decade, they will become the world's superpower for domestic goods

[ericbisono]

i am so glad that Apple move out of China I want to have one first produced in India, congratulations to India

[ashitmallick]

Appel brings in the brand value with itself otherwise Samsung operates the biggest Smartphone manufacturing plant on Earth in Noida (Outskirts of New Delhi, India) but it didn't attracted that much eye balls and these news itself work as an advertisement for the country .

[Globalsouthie]

One, The price of iPhone 14 pro Max is 1099 USD in the USA whereas it's 1700 USD.

Two, Almost everyone buys career unlocked phones !

These two things are a major factor which no one from there gets !!

[Striker_]

Apple knows China labor🇨🇳 is getting older and China will soon be demanding higher wages
India is much younger

[basavarajolekar]

Indian map in the thumbnail is shown wrong. Fix that!

[BibhatsuKuiri]

for non-indians

iphone pro series cost more than monthly salary of "well paid" jobs in india. so you can guess how difficult it is to own an iphone.

[klndthu]

If Apple wants to truly compete in the Indian market, they should manufacture a mid-tier level phone with current tech. And I don't mean just manufacture iPhone 12s with old tech. Where do you think the major revenue comes from? It's the App Store and the % cut they get for every purchase made. It's like Sony PS5s. They get their primary profits off from the sales of games, not the expensive consoles. In fact, Sony loses money for every PS5 sold.

[sudeepkasa]

See some comments that India is not capable to produce "quality phones", has no work ethic. Well, those people need to understand that Apple themselves would have conducted enough background research, done SWOT analysis of such a move and would've identified the viability.

[lord_of_love_and_thunder]

The tone and tenor of many India related videos surprises me. India is one of the largest industrial economies, with an industrial output of nearly $ 1 trillion (nominal), ranking behind only China, USA, Japan and Germany. What the country lacks is the international connections and integration into global supply chains which would dramatically increase industrial output as well as exports. The truth of the matter is that American and European companies did not need India thus far, because the labor in East and SE Asia was more than sufficient to achieve their business goals. This is no longer the case, due to demographic and political reasons, and thus the interest in India. But it wont be easy. The main challenge for foreign companies will be the Indian population and governments aversion to foreign things. Ideally the Indian govt would want Indian workers to make phones designed by Indians in India for an Indian company. This is not compatible with Apple's worldview. Interesting times ahead.

[kunalg]

7:41 if you want to speak about India, at least ensure the Map is correct.

[Kiran_G]

Correct the map of India in the thumbnail & @ 7:40

[deep_z]

Wrong map of India in the thumbnail. Pok and Aksai Chin has been incorrect removed.

[nadhasthirundhitan]

Honestly for the price Apple products can cater only to a niche market...it's just a status symbol...

[BatsiraiMusuka]

6:17 this pie chart is revealing of any county’s disposable income (in this case India’s).

I’d be fascinated to see how every country’s chart looks like. I guess one must also look at whether credit or cash is dominant.