As 2025 approaches, a quarter of iPhones might be manufactured outside China, likely in India—a rapidly expanding market with hundreds of millions of potential customers. The competition is fierce, with Samsung and other Chinese brands also placing big bets on this Asian giant.
a burgeoning market
The tech giants producing the smartphones we use daily are facing multiple challenges. Growth, the engine of capitalism, is slowing down. Tariffs reintroduced by Trump have increased production costs, and the buzz around the latest innovations like AI in smartphones raises doubts about its real impact on consumers.
India emerges as a potential solution, addressing several of these issues. Unlike the United States and the United Kingdom, where smartphone penetration already reaches 90%, India still shows vast growth potential with approximately 50% of its population without a smartphone. According to financial forecasts, India is poised to become the third-largest economy globally, offering numerous opportunities for phone manufacturers.
unique challenges
India stands out from major Western markets because mobile phones are often not just an addition to other devices like PCs or laptops. For many people in India, the phone is the sole device used daily to access the Internet. Industry experts highlight that “there’s still plenty of room for growth, as about half a billion people do not yet have a smartphone.”
successful strategies in india
The strategies that have worked in the US or Europe cannot simply be transplanted into India. Take Vivo as an example; it was the number one brand in the Indian market with a 15.8% market share in Q3 2024. Although not a local brand—Vivo belongs to China’s BBK group alongside Oppo, OnePlus, Realme—it has managed to capture the Indian market through innovations such as gimbal sensor stabilization and pixel shifting in its Vivo X50 Pro and X60 series.
- The perception of “value for money” among Indian consumers is rapidly evolving towards purchasing more premium phones.
- Smartphones are now seen as an investment opportunity.
This trend is confirmed by an increase in average smartphone prices in India, rising from $192 in Q3 2020 to $293 in Q3 2024.
the role of chinese brands
The entry of Chinese brands into the Indian market has democratized prices, making smartphones more accessible. However, this has also led to fierce competition, with brands like OnePlus and Realme seeing their market shares decrease against giants like Apple and Samsung. Despite efforts to open new factories in India, Samsung lost nearly 20% of its annual market share—a result of increased competition and some strategic decisions.
apple and samsung’s footprint in india
Apple succeeded in increasing its market share in India by nearly 60% between Q3 2023 and Q3 2024. The brand is perceived as aspirational in India with a strong brand halo; everyone would love to own an iPhone even if it’s not always financially feasible,” experts explain. This perception has contributed to consumer loyalty, although older generations of iPhones still account for most annual sales.
- Samsung has diversified its production sites across India through partnerships with manufacturers such as Foxconn.
The complexity of production chains remains challenging particularly concerning processors made by leaders like TSMC. It’s crucial to differentiate between “assembled in India” and “made in India,” since manufacturing complex components largely remains dominated by specialized players.
an uncertain manufacturing horizon
Smartphone manufacturing is a highly specialized field. Most manufacturers do not design their own processors but depend on third parties such as Qualcomm or MediaTek. Even companies like Samsung that own fabrication facilities continue using Qualcomm chips for flagship models—a dependency highlighting the difficulty of fully shifting production to India despite cost advantages and local market presence.
- The main obstacle lies within advanced semiconductor production dominated by TSMC in Taiwan.
- A disruption could have global repercussions making diversification indispensable yet complex.
the future of smartphone manufacturing
India offers considerable opportunities for smartphone makers not only as a consumer market but also as an alternative production hub. However transitioning entirely will require significant investments along with technological innovations overcoming challenges related to advanced component manufacturing.
