This is the strongest drawdown since the holidays of 2018, experts at broker Cauvo Capital note. Market players are worried that the tech giant is losing its share in the Middle Kingdom, which accounts for about 20% of its sales.
The drawdown in Apple's results in China was very severe, distorting an otherwise good performance (in particular, its overall sales increased for the first time in a year). Evidence that the firm is facing increasing challenges in the Chinese market has been emerging for several months.
Last fall, Chinese authorities introduced a ban on the use of iPhones and mobile phones of other foreign brands during working hours for government employees from key structures. Huawei introduced the Mate 60 Pro phone, announced as a rival to Apple products. The latter, at the beginning of this year, introduced a discount program on Chinese territory for the first time in a long time, reducing the cost of the iPhone 15 by $70.
The Chinese market is important for the American corporation as the third place in the structure of its revenue, as well as its production base (large some of its products are assembled in factories in this particular country), analysts’ reviews on Cauvo Capital note. In addition, the population of the Middle Kingdom is 1.4 billion people, and the middle class among them is growing, which creates excellent prospects for development in this market.
Apple does not expect a significant increase in smartphone sales in the current quarter
The company's executives said that they continue to have unconditional faith in China. According to the general director of the company, he is extremely optimistic about the Celestial Empire, if we talk about the situation in the long run. The corporation's chief financial officer said that the smartphone industry in China has the greatest competitive power in the world.
Apple's quarterly revenue increased by 2% to $119.58 billion. Of this amount, the iPhone accounted for $69.7 billion (an increase of 6% year-on-year). At the same time, iPad sales fell by more than a quarter, amounting to $7.02 billion. Sales of portable equipment and accessories fell by 11.3%, to $11.95 billion.
Apple previously reported that the increase in smartphone sales in the current quarter will be weaker than analyst forecasts. Expectations regarding the corporation's performance were already revised 3 months ago, and now experts at cauvocapital.com say that the time has come to repeat this operation.
