To calm investors who are concerned that it is falling behind Huawei Technologies (HWT.UL) and other regional smartphone manufacturers, Apple (AAPL.O) stated on Thursday that demand for its iPhones in China was high.
“We set a quarterly record for the September quarter for the iPhone in mainland China,” Chief Executive Tim Cook said in a Reuters interview. “We had four out of the top five best-selling smartphones in urban China.”
On a conference call with analysts, he stated that although the smartphone market may have shrunk overall, Apple seems to have increased its market share in China between July and September. Despite one fewer week of sales in this quarter than last, Cook stated that the business anticipates selling more iPhones over the Christmas quarter.
According to research company Canalys, China’s total smartphone sales decreased by 3% between July and September of last year compared to the same period, as customers purchased fewer cell phones due to an uneven economic recovery. The fact that the fall rate was less rapid than in prior quarters suggests the market’s downturn has abated. According to Canalys, iPhone sales in China dropped by 6%.
Analysts, however, predict that Huawei’s smartphone sales in China increased significantly during the quarter. Its Mate 60 Pro phone made news because it used a cutting-edge technology built in China, even though the company had been under crippling U.S. sanctions for years.
Apple reported a 2.5% decline in overall sales in China on Thursday, citing challenging sales of Mac computers and iPads. Cook added that after taking foreign exchange rates into account, sales increased there. Apple’s fiscal year 2023 they concluded on September 30. During the first three of the four quarters, the company’s sales in China decreased.
Analysts stated that despite indications that a recovery in the larger smartphone market was picking up steam, they were still optimistic about Apple’s demand prognosis in China into the fourth quarter.
Major Chinese online retailers are aggressively reducing the iPhone 15 series in the lead-up to the annual Singles Day shopping event, driving demand.
While Apple periodically permits its Chinese partner sellers to provide discounts to increase demand, these stores compete with one another on “value for money” to attract customers. Platforms such as JD.com (9618. HK), Pinduoduo (PDD.O), and Alibaba’s (9988. HK) Taobao have been offering significant discounts on iPhone 15 models over the last two weeks. These discounts have resulted in price reductions of up to 1,501 yuan ($205.14) below retail.
“While the latest iPhone series underperformed in China in the launch quarter due to a shorter pre-holiday shopping period coupled with supply mismatches on the Pro Max, it could see improvement in the year-ending quarter with a strong 11.11 sales event performance,” Counterpoint, a research firm, wrote in a Friday note.
Apple’s remarks came after upbeat remarks made on Wednesday by Qualcomm (QCOM.O), its chip supplier, indicating that a two-year decline in the smartphone industry was beginning to improve, driven mainly by a rebound in China. Another supplier of wireless connection chips to Apple, Qorvo (QRVO.O), reported its most excellent bookings quarter in over two years and that inventory levels at its Chinese clients were gradually declining. Although Huawei’s processors are a fresh source of competition for Qualcomm, the company stated on Wednesday that it does not anticipate Huawei’s re-entry into the market to impact its partnerships with Chinese smartphone manufacturers.
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