Apple CEO calls China "the most competitive market in the world" amid falling iPhone sales
Kyiv • UNN
Apple reported disappointing quarterly results due to weak demand in China and stiff competition from Huawei, but remains optimistic about the long-term potential of China and other markets such as India, announcing a record $110 billion share buyback plan and hinting at future AI product launches.
Apple CEO Tim Cook called China the "most competitive market in the world" as the tech company posted disappointing quarterly results on Thursday due to weak demand in the world's second largest economy and fierce competition from Huawei Technologies, UNN reports citing Nikkei Asia.
Details
Apple's revenue for the three months ended March 30 decreased by 4.3% year-on-year to $90.75 billion. iPhone sales fell by 10.5% to $46 billion.
The decline in sales was mainly due to the Asian region. In Greater China, which covers the mainland, Hong Kong and Taiwan and has been the main engine of Apple's growth in recent years, revenue for the quarter decreased by 8.1% year-on-year to $16.4 billion.
"I maintain a great vision for China over the long term," Cook said during Thursday's earnings call. - "I don't know how every quarter and every week goes, but I have a very positive view over the long term.
The CEO said he had a "great visit" to China earlier this year and that the reception to Apple's new retail store in Shanghai was "very warm.
But Cook acknowledged the ongoing challenges Apple faces in China, including the competitive environment.
According to Counterpoint Research, iPhone sales in China for the January-March quarter fell 19.1% year-on-year as Huawei's comeback directly impacted the country's premium smartphone segment. Huawei's sales grew by 69.7%, while total smartphone sales in China for the quarter were up 1.5% year-on-year.
"The good news is that help is on the way, as we believe the moderating demand cycle and the arrival of the AI-powered iPhone 16 model on the horizon should allow Apple to return to growth in China with a tailwind in FY25," said Dan Ives, managing director at Wedbush Securities, adding that the rollout of Huawei 5G phones and the failed iPhone 15 refresh cycle were a "black cloud" for Apple.
Japan recorded an even sharper decline in sales, down 12.7% to $6.3 billion. The rest of the Asia-Pacific region recorded the largest year-on-year decline in revenue among Apple's regions for the quarter: a 17.2% drop to $6.7 billion.
However, Apple set a revenue record in Indonesia for the quarter, Cook said at a press conference, calling the Southeast Asian country "one of the many markets where we continue to see so much potential.
Cook's comments came after his visit to Indonesia and Vietnam in April, during which he told Indonesian President Joko "Jokowi" Widodo that the iPhone maker would "consider" manufacturing in the country.
Apple also showed "strong double-digit growth" and set a new revenue record in March in India, Cook said.
"I see India as an incredibly interesting market, and it is a major focus for us from an operational or supply chain perspective," he said.
As China remains the largest market in Asia despite headwinds, the American tech giant is deepening ties with it while expanding production in Southeast Asia and India.
An in-depth study of Apple's annual official supplier list shows that the total number of Chinese suppliers increased to 52 in 2023, up from 48 a year earlier, maintaining the country's position as the largest source of suppliers for four consecutive years.
Currently, there are 286 manufacturing or research and development enterprises in China, which is 10 more than last year.
Despite the obstacles, Apple announced its largest share buyback plan to date on Thursday.
"Given our confidence in Apple's future and the value we see in our stock, our board of directors has authorized an additional $110 billion in share repurchases," CFO Luca Maestri said in the earnings report. - "We are also raising our quarterly dividend for the twelfth consecutive year.
The share buyback plan sent Apple's stock up nearly 7% in extended trading on Thursday.
During Thursday's earnings report, the company also hinted at new AI-based product launches.
"We continue to be very optimistic about our capabilities and generative artificial intelligence," said Cook. - "We are making significant investments and look forward to sharing some very exciting things with our customers soon.
