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Apple bites big, turns largest smartphone exporter from India

New Delhi: Apple has for the first time outpaced Samsung on smartphone export volumes from India, shipping 49% of the country’s total 12 million shipments in the June quarter compared to its Korean rival's 45%. This underscores the Cupertino, US-based company's rapid expansion of local manufacturing in the country.

Industry data showed Apple, which makes iPhones in India through contract manufacturers, clocked a rapid growth in export volumes in the last year. Its share of exports soared from just 9% of the roughly 8 million smartphones shipped in Q2 2022, to almost half the total smartphone exports in Q2 2023, industry executives said. India exported around 13 million smartphones in March quarter this year, which fell to 12 million in Q2 2023. Exports stood at 10 million smartphones in Q1 2022, and 8 million in Q2 2022, according to data accessed by ET.

To be sure, Apple has been the leading smartphone exporter from India in value terms in the first half of 2023, given that it plays in the premium and super premium segments while Samsung has devices across price bands, say experts.

Apple’s robust performance since it began manufacturing in the country in 2017 was driven by a ramp-up in production by three of its contract manufacturers — Foxconn, Wistron, and Pegatron — from the second half of 2022 with the production of iPhone 14 and below to cater to the growing Indian market as well as exports.

All three manufacturers are part of the Indian government’s production-linked incentive scheme for smartphone manufacturing. Wistron and Foxconn have also applied for the incentives after meeting the incremental production target, and have also received a part of the payouts due to them.

Foxconn has already started making the latest iPhone 15 at its Chennai plant, as reported by ET earlier, with India-made units expected to be available for sale from Friday.

Experts said this underpins Apple’s desire to turn India into an export hub for iPhones, the company’s highest selling product globally, in a bid to diversify its reliance on China, amid geopolitical tensions. At the same time, Samsung and other Android smartphone brands, which export from India, have seen a stark decline in exports. Industry executives attributed this to the global downturn in demand, which has particularly hit Android smartphone brands. “As the first quarter of the calendar year coincides with the last quarter of the financial year, there is also a general rise in exports for brands to meet their year-end targets to claim incentives under the PLI scheme. This is also one of the factors behind higher exports in the first quarter, as compared to the second quarter,” an industry executive said.

Samsung’s share of export volumes fell from 50% in Q1 2023 to 45% in Q2 2023. This marks a sharp decline from Q2 2022 when the South Korean company had a dominating 84% of the export market from India.

Industry executives said, requesting anonymity, that Samsung’s weak export performance in India is also tied to Vietnam becoming a larger export hub for the company. The company’s factory in North Vietnam is its largest smartphone factory globally. Meanwhile, exports by other Android brands (Xiaomi, Motorola, Vivo, Transsion) declined from 10% in Q1 2023, to 6% in Q2 2023.

Emails to Apple, Samsung, and other brands including Xiaomi and Vivo didn’t elicit any response till press time. A Motorola India spokesperson said that despite global shipments decreasing in the first quarter of 2023, the company has seen consistent growth in exports this year with a 25% increase in Q1 over the previous quarter.

“We have successfully partnered with Dixon to be among the first participants of the PLI scheme for mobiles. In addition to enhancing our ability to serve Indian customers with innovative products, we are proudly manufacturing 100% of our devices in India and exporting to global markets worldwide, including the US,” the spokesperson said.

Market researcher Counterpoint Research has predicted that 2023 global smartphone shipments will decline 6% to 1.15 billion units, the lowest in a decade, with macroeconomic headwinds in China and North America pushing smartphone replacement rates to record highs worldwide.

The industry executive cited above said exports from India are shipped to major ports in the UAE, Rotterdam, South Africa, and the US, but do not serve the China market. Amidst the downturn, Counterpoint noted that Apple can grow in a “resilient premium market and strong showing in the US”, pushing it to become the top smartphone brand globally in terms of annual shipments for the first time ever.

By Subhrojit Mallick

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