Which Indian Companies are in Apple's Manufacturing Ecosystem?

Apple Inc. is one of the largest technology companies in the world. It has a great history of innovation, quality, and success.

But does Made in India come to mind come to your mind when you think of Apple?

For a long time, Apple's presence in India was nothing to write home about. Until recently, no one associated Apple with India. But now this has changed.

In recent years, Apple has been focused on expanding its presence in India. The reasons are not hard to find. India is a rapidly growing market with a large and growing middle class.

The government has also played its part. Apple has benefited from India's PLI scheme for mobile devices and electronics manufacturing.

As per media reports, Apple suppliers made iPhones worth US$ 14 billion (bn) in India during FY24.

This was 14% of the global total that is, about one in seven iPhones sold worldwide. Apple's production in India includes iPhone models 12, 13, 14, and 15. Soon the iPhone 16 will be added to the list.

In fact, Apple saw a remarkable surge in iPhone exports from India, soaring from US$ 6.27 bn in the FY23 to US$ 12.1 bn in FY24, nearly a 100% increase. The company reportedly exports 70% of its India output, which could increase in future.

This growth highlights the increasingly significant role India plays in Apple's global supply chain. Apple has been diversifying its operations away from China. Its working with assembly and component manufacturing partners in India and a few other countries.

For its latest offering, the iPhone 16, Apple has indicated to its component suppliers that the firm wants to procure batteries for the upcoming iPhone 16 from Indian factories.

Apple aims to produce more than 50 million (m) iPhones annually in India over the next two to three years. The plan also includes the production of tens of millions of additional units subsequently.

So which Indian companies are in the fray?

Tata Electronics

The unlisted Tata Electronics is the first name on this list. It's the only Indian firm to produce iPhones.

After acquiring Wistron Corporation, the Tata group began producing iPhones from eight lines at its plants in the Kolar industrial area.

The company also has a well-established electronics manufacturing facility in Krishnagiri in Tamil Nadu.

Tata Electronics is working with Apple to scale up its iPhone manufacturing facility in Koothanapalli, in Hosur, with an investment of Rs 50 bn, spread across 500 acres. The factory will supply iPhone components but may also cater to other high-end phone brands.

The current market speculation is that the Tata group are in advanced talks to acquire a majority stake in Pegatron's iPhone manufacturing unit in India. If this happens, the Tatas will gain access to the Taiwanese contract manufacturer's technical expertise.

Titan and Murugappa Group to Join the Race?

Last month, Business Today had reported that Apple was in advanced talks with the Murugappa group and the Tata group firm Titan Company for the assembly of iPhone camera modules.

These companies have a presence in high precision manufacturing. Back in 2022, the Murugappa group had acquired Moshine Electronics, a camera module firm in Noida.

Titan Company also has a strong presence in this space via its subsidiary, Titan Engineering and Automation. This company has many reputable clients in the aerospace and defence sectors.

Then there is the unlisted Aequs ltd which is on a fund-raising spree. ET has reported that the company in in talks with Apple for components.

With Apple's main suppliers setting up a mega factories in India to reduce its dependence on China, the India growth story has just begun.

What About Other Indian Companies?

First, we should clarify a common misconception.

The company, Dixon Technologies, is not a part of the Apple ecosystem in India. It does make cell phones but not for Apple.

If this were to change in the future, it would be huge for the company. It makes sense to keep the stock on your watchlist.

Then there is Redington India. The company is a leading distributor of Apple's products in India.

It's possible that the company's business with Apple will grow steadily. Nearly 30% of revenues come from Apple at the moment. With only 2 distributors in India which distribute Apple products - Redington and Ingram - it's a duopoly.

Besides, it's not only mobile phones but Redington is also the distributor of other IT products of companies like Dell and HP. The company is also focussing in to cloud services distribution and management which is a high margin business.

Then there's TCPL Packaging. It's one of India's largest folding carton manufacturers as well as a standalone paperboard converter.

To diversify and tap the growth opportunity in the expanding smartphone and electronics sector, it acquired an 89% stake in Creative Offset Printers Pvt (COPPL). This firm has a presence in the high-margin rigid box space. COPPL supplies boxes to leading mobile companies such as Samsung.

With Apple shifting some of its manufacturing base in India, making packaging boxes for Apple could be the game changer.

Currently, Apple sources its packaging requirement from its global vendors in India. However, the company is hopeful it will increase localisation.

Apart from these three listed companies, Apple is tying up with various start-ups in India. None of them are listed unfortunately.

However, some of them will ride the coattails of Apple's rise in the Indian market and grow to become large companies. If they hit the market someday, these companies could become wealth creators for Indian investors.

As investors, it's important to keep a close eye on Apple's growth in the country. It will create wealth within its ecosystem. Keep this opportunity is mind when you're looking for stocks that could benefit from the Apple story in India.

Happy investing.

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