After the iPhone manufacturer said that demand had recovered in mid-June after COVID-19 lockdowns slowed sales, some analysts cautioned on Friday that Apple should be prepared for a decline in demand in China as consumers cut spending in a sluggish economy.
The iPhone manufacturer announced on Thursday that its Greater China quarterly revenue decreased by 1%, breaking a string of profitable quarters there.
Apple reported that despite macroeconomic signs turning negative, there has been no decrease in demand for iPhones globally as its overall revenue increased by 2 percent, above predictions.
Tim Cook, the CEO of Apple, attributed the decline in sales from Greater China to the country’s cities’ stringent lockdowns, which made millions of people stay at home and severely hurt the Chinese economy.
“Based on the COVID lockdowns, we did observe a decrease in demand in the cities that were impacted. And in those same cities, in the month of June, there was a recovery near the conclusion of the quarter “added he.
Consumer confidence is hovering near record lows, private investment is slowing down, and youth unemployment is at a record 19.3 percent, undermining a recovery in the second-largest economy in the world. These factors have prompted calls for more urgent government stimulus.
In a move it occasionally makes when sales are sluggish, Apple this week announced discounts on iPhones and other products for Chinese customers.
Nevertheless, analysts said the corporation is better protected from a slowing economy because it is the only well-known brand supplying pricey devices.
Huawei, Apple’s main rival in the high-end market, has seen sales drop as a result of U.S. sanctions that prohibited it from obtaining necessary components. Although a Huawei spin-off, Honor is expanding quickly but has not yet penetrated the high-end market.
According to Counterpoint Research, the volume of smartphones sold overall in China between April and June decreased 14.2 percent year over year and reached a decade low.
According to Counterpoint, despite a 5.8 percent sales volume decline in the quarter, Apple’s market share in China increased marginally to 15.5 percent, suffering less of a hit than Oppo, Xiaomi, and vivo.
Unlike in late 2020, when demand for phones in China increased following the initial COVID shutdown, phone sales are anticipated to decline, according to IDC analyst Will Wong.
“It’s not just the lockdown, but other issues, like the government’s crackdown on technology and the slump on the property market,” he claimed.
In the fall, Apple plans to introduce a new iPhone model.
According to Canalys analyst Nicole Peng, sales of the new smartphone in China are not anticipated to surpass those of the iPhone 13 from the previous year.
Although Apple may be concerned that demand is waning, high-end phone sales typically remain steady in China.
