Apple's long-term bet on India is starting to pay dividends. Morgan Stanley wrote in a report on Friday that the company's iPhone revenue in India will increase 42% year-on-year in 2023 to $8.7 billion.
In 2023, India's iPhone shipments will increase by 39% year-on-year to 9.2 million units, becoming the fifth largest smartphone market for iPhone. Morgan Stanley added that India's iPhone business is now larger than any independent country in the European Union.
This means that in FY23, India accounted for 4% of iPhone shipments and revenue, up from 3% in FY22 and 1% five years ago. "In comparison, China's iPhone shipments accounted for 20% of iPhone shipments and revenue in FY23 (down 1-2 percentage points year-over-year, respectively)," the analysts wrote.
"Ultimately, what this means is that India as a stand-alone market is still not large enough to offset the decline we are currently seeing in China, but if India continues on the same growth trajectory and Chinese iPhone shipments are flat, India will become a larger iPhone market than China by 2027."
What's driving iPhone growth in India is growing consumer demand for higher-end devices with more storage capacity, rather than the latest models. Morgan Stanley said the average memory capacity of iPhones sold in India last year was about 260GB, an increase of 26% from 2022. In 2023, the average selling price (ASP) of iPhones in India will increase by 2% year-on-year to US$940.
Morgan Stanley quoted data from research firm IDC as saying that the five largest iPhone models shipped in India are iPhone 13, iPhone 14, iPhone 14 Plus, iPhone 14 Pro and iPhone 15, which account for 86% of total sales. The average iPhone selling price in India is US$940, which is still about 10% lower than the global average selling price of US$1,045.
Apple sees India as a major future growth engine and opened its first two retail stores in the country last year. Morgan Stanley estimates that the tech giant's revenue in India will reach $40 billion by 2032.