Apple's China revenue dives 33% amid iPhone sales slowdown

Apple on Tuesday announced a steep decline in Greater China revenue for the third fiscal quarter of 2016, but CEO Tim Cook is optimistic about the region's future, one of the company's most important.

Revenue from Greater China, which includes Taiwan, Hong Kong and mainland China, came in at $8.85 billion for the quarter, down 33 percent from the same time last year. The performance represents the worst decline of Apple's major operating segments, behind a 20 percent drop in Asia Pacific, 11 percent in the Americas and 7 percent in Europe.

With its huge consumer base and growing middle class, China is seen as Apple's greatest chance at growth as the iPhone sales boom stagnates in more mature markets like the U.S. Past quarters saw the region deliver on that promise with double-digit gains like the massive 99 percent year-over-year jump in 2015, but recent economic headwinds have led to muted results.

Commenting on the revenue dip, Cook reminded investors that current revenues compare against a backdrop of record-setting growth enjoyed over the past few years. Despite appearances, Apple's underlying business is stronger than results imply.

"To keep things in perspective, when we look back on our accomplishments in this segment over the last couple of years, they are truly remarkable" Cook said. "In the first three quarter so this fiscal year, our total revenue from Greater China was almost $40 billion, up 55 percent from the same time frame just two years ago, while iPhone units were up 47 percent."

He also pointed to a wider economic slowdown due to a Chinese yuan depreciation against the dollar.

As it applies to iPhone, Cook said the greatest global channel inventory reduction came from China. First-time smartphone owners and Android switchers comprised a bulk of iPhone sales in the region for the quarter and, longer term, the company's iPhone install base has grown 34 percent over the last year. Further, China Mobile, the country's largest cellular provider by subscribership, said there are more iPhones operating on its network than any other brand.

As expected, Apple continues to invest heavily in China. During today's investor conference call, Cook mentioned a $1 billion investment in Chinese ride sharing service Didi Chuxing and the opening of Apple's 41st retail outlet in China.

9 Comments

evilution 1395 comments · 13 Years

About 8 years ago

Imagine that. People aren't buying the current iPhone only 7 weeks before the new one comes out.

gatorguy 24609 comments · 13 Years

About 8 years ago

evilution said:

Imagine that. People aren't buying the current iPhone only 7 weeks before the new one comes out.

This same quarter last year a new iPhone was getting ready to launch in a few weeks, right? This just seems to confirm recent reports that China's own smartphone companies are stealing away market share from the big boys like Sammy and Apple. Huawei for instance reported big gains in China, now #1 with 19% of their market. (Apple is holding at #9 with about 9%):

"Huawei has announced its financial results for the first half of 2016. The company saw a sales revenue increase of 41.% over the same period last year, with ¥77.4 billion ($11.6 billion), with smartphone shipments up 25% to 60.56 million units.
With this progress, Huawei has captured 11.4% of the global smartphone market. The company has also apparently taken 10% of the market for phones between $500 and $600. It's marketshare in China hit 18.6%, while the company also strong growth in developing markets Latin America and Central Asia."
It's really no surprise that Mr Cook is promoting India as a potentially huge market going forward. China is becoming less and less friendly to Western techs such as Apple IMO, based on recent events.

TurboPGT 355 comments · 9 Years

About 8 years ago

gatorguy said:

evilution said:

Imagine that. People aren't buying the current iPhone only 7 weeks before the new one comes out.

This same quarter last year a new iPhone was getting ready to launch in a few weeks, right? This just seems to confirm recent reports that China's own smartphone companies are stealing away market share from the big boys like Sammy and Apple. Huawei for instance reported big gains in China, now #1 with 19% of their market. (Apple is holding at #9 with about 9%):

"Huawei has announced its financial results for the first half of 2016. The company saw a sales revenue increase of 41.% over the same period last year, with ¥77.4 billion ($11.6 billion), with smartphone shipments up 25% to 60.56 million units.
With this progress, Huawei has captured 11.4% of the global smartphone market. The company has also apparently taken 10% of the market for phones between $500 and $600. It's marketshare in China hit 18.6%, while the company also strong growth in developing markets Latin America and Central Asia."
It's really no surprise that Mr Cook is promoting India as a potentially huge market going forward. China is becoming less and less friendly to Western techs such as Apple IMO, based on recent events.

They are also a fickle population, China will wax and wane.

SpamSandwich 32917 comments · 19 Years

About 8 years ago

gatorguy said:

evilution said:

Imagine that. People aren't buying the current iPhone only 7 weeks before the new one comes out.

This same quarter last year a new iPhone was getting ready to launch in a few weeks, right? This just seems to confirm recent reports that China's own smartphone companies are stealing away market share from the big boys like Sammy and Apple. Huawei for instance reported big gains in China, now #1 with 19% of their market. (Apple is holding at #9 with about 9%):

"Huawei has announced its financial results for the first half of 2016. The company saw a sales revenue increase of 41.% over the same period last year, with ¥77.4 billion ($11.6 billion), with smartphone shipments up 25% to 60.56 million units.
With this progress, Huawei has captured 11.4% of the global smartphone market. The company has also apparently taken 10% of the market for phones between $500 and $600. It's marketshare in China hit 18.6%, while the company also strong growth in developing markets Latin America and Central Asia."
It's really no surprise that Mr Cook is promoting India as a potentially huge market going forward. China is becoming less and less friendly to Western techs such as Apple IMO, based on recent events.

Once Trump wins I suspect it will be open season on China. He wants them out of the WTO (so do I, for their many trade violations) and he has committed to changing US tax policy to favor US businesses and to staunch the flow of businesses and money to countries that have lower rates. It could cause a new panic and result in China kicking out US businesses (worst case scenario). There's really no easy answer to any of this, but the US seriously reforming the tax code (and ideally shutting down the IRS in favor of building in an automatic collection mechanism, a la the Fair Tax) would be a good start.

cali 3494 comments · 10 Years

About 8 years ago

SpamSandwich said:

gatorguy said:

This same quarter last year a new iPhone was getting ready to launch in a few weeks, right? This just seems to confirm recent reports that China's own smartphone companies are stealing away market share from the big boys like Sammy and Apple. Huawei for instance reported big gains in China, now #1 with 19% of their market. (Apple is holding at #9 with about 9%):

"Huawei has announced its financial results for the first half of 2016. The company saw a sales revenue increase of 41.% over the same period last year, with ¥77.4 billion ($11.6 billion), with smartphone shipments up 25% to 60.56 million units.
With this progress, Huawei has captured 11.4% of the global smartphone market. The company has also apparently taken 10% of the market for phones between $500 and $600. It's marketshare in China hit 18.6%, while the company also strong growth in developing markets Latin America and Central Asia."
It's really no surprise that Mr Cook is promoting India as a potentially huge market going forward. China is becoming less and less friendly to Western techs such as Apple IMO, based on recent events.

Once Trump wins I suspect it will be open season on China. He wants them out of the WTO (so do I, for their many trade violations) and he has committed to changing US tax policy to favor US businesses and to staunch the flow of businesses and money to countries that have lower rates. It could cause a new panic and result in China kicking out US businesses (worst case scenario). There's really no easy answer to any of this, but the US seriously reforming the tax code (and ideally shutting down the IRS in favor of building in an automatic collection mechanism, a la the Fair Tax) would be a good start.

"Once trump wins"

ummm?

He may also call a boycott on Apple while tweeting on his iPhone.