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Apple's Bottom Line Boosted by Strong Growth in This Massive Smartphone Market

By Harsh Chauhan – Nov 3, 2021 at 9:40AM

Key Points

  • Apple's sales in India took off in fiscal 2021 thanks to the increasing adoption of 5G smartphones.
  • Apple occupies the top position in India's premium smartphone space.
  • India's 5G smartphone market still has a lot of expansion potential, and Apple stands to benefit.

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The tech giant's revenue doubled in this lucrative market in fiscal 2021.

Apple's (AAPL 3.71%) fiscal 2021 fourth-quarter earnings may not have wowed Wall Street -- a supply chain crunch put the brakes on the tech giant's sales growth -- but there was a lot to like in the company's stellar report.

Apple recorded sharp jumps in revenue and earnings. Its top line shot up 29% year over year to $83.4 billion and earnings soared 62% to $1.24 per share on the back of robust demand for its products. The global chip shortage and COVID-19-driven manufacturing restrictions kept Apple from delivering stronger numbers, but they couldn't prevent the company from registering terrific growth in the world's second-largest smartphone market: India.

Person sitting and looking at their smartphone near a tuk-tuk taxi.

Image source: Getty Images.

Apple doubles its business in India

CEO Tim Cook pointed out on Apple's latest earnings conference call that business in India doubled in fiscal 2021, which is way higher than what analysts were expecting. Indian English-language business daily The Economic Times had reported in August 2021 that Apple was on track to register 60% growth in India in fiscal 2021, hitting $3 billion in revenue. For comparison, the iPhone maker had recorded 29% growth in India in fiscal 2020.

While Apple doesn't spell out exactly how much revenue it gets from India, calculations based on the data mentioned above by The Economic Times indicate that it would have generated close to $3.75 billion in that market in fiscal 2021. While that's just a small percentage of Apple's annual revenue of $366 billion, the terrific growth that the company is posting in India bodes well for its future.

India is one of the top 5G smartphone markets in the world. IDC estimates that 40 million 5G devices will be shipped in India this year, accounting for 24% of overall shipments, versus just 3.5 million in 2020. Commercial 5G networks are yet to be rolled out in India, but demand for phones supporting the latest wireless standard is spiking as consumers are looking to future-proof their devices.

What's more, Indian consumers are willing to pay more for 5G smartphones. According to IDC, the average selling price (ASP) of 5G smartphones in India is $410. That's significantly higher than India's 2020 smartphone ASP of $156.

Apple has benefited from Indian consumers' willingness to buy higher-priced 5G smartphones. As Counterpoint Research points out, Apple is the fastest-growing premium smartphone brand in India. The company's third-quarter iPhone shipments in that country jumped 212% year over year, giving it a 44% share of devices priced above 30,000 Indian rupees (roughly $400). Apple held even greater sway in the ultra-premium smartphone segment, which includes devices priced above 45,000 rupees (approximately $600 at the current exchange rate), with a share of 74%.

Counterpoint adds that Apple was the top 5G smartphone brand in India in the premium segment in Q3, claiming that position for the first time. Another third-party report estimates that Apple shipped 2 million iPhones in India in the third quarter. That's impressive considering that the company had reportedly sold 3.2 million iPhones in India in 2020 and had just a 2% market share.

Apple's terrific growth was driven by the solid demand for the iPhone 11 and the iPhone 12 models, which reportedly accounted for 62% of its shipments. With the launch of the iPhone 13 in India, Apple has strengthened its position in that market because it now has a bigger portfolio of 5G smartphones that would suit various budgets.

Not surprisingly, Apple's market share in India is expected to increase to 4% in 2021, which could pave the way for stronger growth for the company in the long run.

The momentum is here to stay

India is a budding 5G smartphone market. CyberMedia Research forecasts that 5G smartphone shipments in India could hit 144 million units by 2025, which would represent a huge increase over 2021. Apple is now in a good position to ride that growth thanks to an improved portfolio of 5G devices following the launch of the iPhone 13, and also because it is reportedly working on a pocket-friendly, 5G-enabled iPhone SE that's expected to hit the market in early 2022.

As such, don't be surprised to see the tech giant's market share in India head north in the future as 5G smartphone adoption increases, which should help the company sustain its impressive momentum and generate more revenue from this key market.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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