When it comes to the Apple growth story, the company needs new big markets to go after to sustain 5-10% revenue growth over the next seven years (until 2030). Investors have been focused on this more over the past year. For example, in Apple’s June 2022 earnings call the topic of India came up 3 times. Compare that to the first two earnings calls in 2023 when the topic came up an average of 12 times.

From the demand perspective, India is one of the important parts of Apple’s growth story for the balance of the decade. On the June earnings call, Cook commented that India hit a June quarter revenue record and grew “strong double digits” and the company opened two new stores that Cook commented are “beating expectations.”  Apple is early in the process of building out channels and putting investment in direct-to-consumer. It’s the largest market in the world, and Cook says they have a “very very modest market share and it’s a huge opportunity.”

This begs the question, how much can India move the needle for Apple? The company does not break out sales for the country, and we estimate that India is about 3% of revenue today or ~$12B in sales growing at 20-25% y/y. Long-term we believe India should surpass Greater China, which will account for about 20% of sales this year or just under $80B.

From the production perspective, we estimate 2% of Apple’s revenue is made in India. Over the next five years that will change.

The topic of Apple in India made headlines last weekend following a report from a major Indian news outlet (Press Trust of India) that Apple will begin manufacturing AirPods in India and more broadly the value of products produced in India will increase 5x over the next 4-5 years, reaching $40B.

To put these numbers in perspective, today we estimate that 2% of Apple’s overall revenue is made in India, compared to our estimate that 40-45% of revenue is made in China. As a reminder, about 20% of Apple’s revenue is Services which doesn’t fall under any country.

The Press Trust of India’s reporting that Apple’s goal is to reach $40B in production in India by 2027 implies Apple production will grow 42% per year in the country which is well above Apple’s projected 5% plus revenue growth rate during that period.

We believe by the year 2027, 25-30% of Apple’s overall revenue will be made in China, down from 40-45% today. Of that 15% decline,  we estimate half will move into India. In other words, India is central to Apple navigating China’s geopolitical production risk.

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