Apple targets 32% of iPhone production and 26% of value in India by FY27

Apple Inc and its vendors are aiming to assemble 32 per cent of iPhone’s global production volume and 26 per cent of its value in India by 2026-27 —a year after the final year of the  of the five-year production-linked incentive (PLI) scheme for mobile devices.

 

This could translate into a production value of over $34 billion, assuming global iPhone sales remain consistent with 2023-24 (FY24) levels.

 

The estimates are based on discussions between Apple Inc and its vendors, along with central and state governments, regarding the assembly of products in India, according to sources familiar with the matter. A query to an Apple Inc spokesperson did not receive a response.

 

For the first half of 2024-25 (FY25), Apple’s vendors estimate a freight-on-board (FOB) production value of $9 billion. By the end of the financial year, it is projected that India will account for 17-18 per cent of global iPhone production volume and 14 per cent in terms of value.

 

In FY24, only 12-14 per cent of the global iPhone production volume shifted to India, with the value accounting for over 10 per cent.

 

Based on vendor planning, the company is expected to close FY25 with a production value of $18 billion (market value around $27 billion). The market value of iPhones includes sales, distribution expenses, and dealer margins, while FOB represents the value during shipping.

 

In FY24, the production value of iPhones from India stood at $14 billion.

 

The shift of iPhone production from China is big for India, as the phones account for 51 per cent of Apple Inc’s total global revenue in the financial year ending September 30, 2024, which totalled $391 billion.

 

iPhone global revenues, at $201 billion, are 21 per cent higher than Tata group’s total revenue of $165 billion and 67 per cent higher than Reliance Industries’ revenue of $119 billion for FY24.

 

On the global stage, Apple’s iPhone revenues are comparable to Microsoft’s ($211 billion) and larger than those of Chevron ($200 billion), Honda Motor ($141 billion), Ford Motor ($176 billion), and Nestlé ($103 billion), among others.

 

Thus, any shift in production capacity to India means huge incremental revenues for the country. The importance of this shift can be gauged by the fact that JP Morgan previously estimated that 25-30 per cent of iPhone production volume would move to India by 2026-27.

 

Apple had initially committed to shifting only 10 per cent of its production to India by the fifth year of the PLI scheme. However, it has already exceeded that figure in the third year of the scheme.

 

The situation could change further if US President-elect Donald Trump imposes higher tariffs on mobile devices (currently 15 per cent), particularly with regards to China, with which the US is in a trade war. Trump has discussed the possibility of punitive tariffs up to 60 per cent, which could benefit India, Vietnam, and other Southeast Asian countries.

 

Of course, Apple’s vendor targets could change if th government does not find further ways to bridge the cost disability of India with China and Vietnam by reducing   tariff rates on components used in mobile devices, easing labour laws and improving logistics . Moreover, the challenge of meeting value-addition targets of 35-40 per cent by the end of the PLI scheme could complicate the situation.

 

APPLE OF INDIA’S EYE

 

·         iPhone production value expected to hit $18 billion in FY25, up from $14 billion in FY24

·         India projected to account for 17-18% of global iPhone production volume in FY25

·         With the high-value iPhone 16 Pro series being assembled in India for the first time, this will boost the value share in the next two years

·         The shift of iPhone production, which currently generates 51% of Apple’s global revenues, from China to India will generate high revenue for India