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Apple should have been enjoying the release of its recent quarterly results. After four consecutive quarters of decline, the iPhone maker returned to quarterly sales growth for the three months ended December 30. iPhone sales rose 6% to $69.7 billion and the company’s services business reached a record high of $23.1 billion. Apple’s total revenue rose to $119.6 billion, beating analysts’ expectations.
In fact, Apple performed well everywhere – with one big exception. Sales in Greater China, which includes mainland China, Hong Kong and Taiwan, fell 13% year-on-year, a bigger decline than analysts had predicted. China is one of Apple’s most important markets after the US and Europe.
Apple shares fell 2.9% in extended trading after the iPhone maker released its quarterly results, knocking $84 billion off the company’s market valuation. Apple’s decline comes amid a good day for the overall US tech sector, with Meta and Amazon’s shares rising 15.2% and 7.1% respectively in after-hours trading after bumper earnings.
Investors may be concerned about more than just weak sales in China. Apple Chief Financial Officer Luca Maestri warned that year-on-year comparisons for the current quarter will be distorted after demand surges in early 2023. Maestri suggested sales this quarter would be roughly equal to a year earlier – minus the roughly $5 billion in spending on post-Covid rebound.
Apple can take solace in its sales elsewhere, at least in Asia. The company’s Japan revenue reached $10.16 billion, far above analysts’ expectations, and Cook claimed that iPhone sales in South Korea reached a record high. The company received record December-quarter revenues from emerging markets including India and Indonesia.
“The positive emerging market trend is welcome news, but China remains a source of some concern,” Evan Lamm, senior analyst at Counterpoint Research, wrote in a research note. “We’ll see if Apple gets aggressive on pricing in the key weeks before Chinese New Year.”
china competition
Apple has tried to boost sales of the iPhone 15 series in China, including offering a rare discount ahead of the Lunar New Year holidays.
Company CEO Tim Cook called China “the most competitive smartphone market in the world” in an interview with Reuters. The company is the best-selling smartphone maker in mainland China, yet it faces the double whammy of a slowdown in consumer spending and more affordable offerings from local brands, according to research from IDC and Counterpoint Research.
Apple’s biggest Chinese competitor is Huawei, which has released a new series of smartphones powered by advanced chips made in China. The release of Huawei’s Mate 60 Pro sparked a wave of nationalist pride in the country, as state media trumpeted the Chinese company’s ability to withstand US sanctions. According to Counterpoint data, Huawei had the biggest jump in market share in the last quarter of 2023.
Fellow Chinese brands Xiaomi and HONOR also increased their market share in the last three months of 2023.
Chinese consumers are also turning to new foldable designs developed by companies like Huawei and HONOR. HONOR Chief Marketing Officer Ray Guo claimed at the Fortune Global Forum last November that more than two-thirds of consumers are ready to get a foldable phone as their next device purchase.
“Foldables are a very popular and fast-growing segment in China,” IDC analyst Nabila Popal told Reuters. He also said that “Apple doesn’t have any foldable devices yet.”
Apple is also losing its grip on the lower end of the market. Lam wrote that consumers who buy older iPhone models are turning to locally made products instead.
This story originally appeared on Fortune.com
Source: finance.yahoo.com
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