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Apple Announces iPhone Discounts After China Revenue Dips

Some analysts have said the US tech giant could face a drop in demand given China’s weak economy and the slump in smartphone sales in the second quarter.


Apple‘s overall revenue rose 2%, beating estimates, and the company said there had been no slowdown in demand for iPhones globally. File photo: Reuters

 

Apple announced discounts on iPhones and other items in China after it reported a small fall in quarterly revenue in China on Thursday.

Some analysts have said the US tech giant could face a drop in demand given the weak economy and slump in smartphone sales in the second quarter.

The iPhone maker said demand had rebounded in mid-June after Covid lockdowns in Shanghai and a range of other cities, which hammered retail spending for a couple of months, ended.

Apple‘s overall revenue rose 2%, beating estimates, and the company said there had been no slowdown in demand for iPhones globally despite macroeconomic indicators turning negative.

Apple boss Tim Cook blamed the drop in China revenue on strict lockdowns that forced millions to stay home and hammered the Chinese economy.

“We did see lower demand based on the Covid lockdowns in the cities the Covid lockdowns affected. And we did see a rebound in those same cities toward the end of the quarter in the June timeframe,” he said.

China’s strict curbs to stamp out Covid have undercut a recovery in the world’s second-largest economy, with consumer confidence hovering near record lows, private investment slowing and youth unemployment at a record 19.3%, prompting calls for more urgent government stimulus.

 

ALSO SEE: China’s Smartphone Sales Slump to Lowest Level Since 2012

 

 

Company ‘Insulated’

Still, the company is more insulated from a weak economy because it is the only leading brand offering expensive devices, analysts said.

Apple‘s chief competitor in the high-end segment, Huawei, has seen sales collapse after US sanctions prevented it from sourcing key components. Honor, a Huawei spin-off, is growing fast but is yet to break into the high-end market.

Overall Chinese smartphone sales in April-June fell 14% on-year and volumes hit a decade low, Counterpoint Research said on Wednesday.

Apple‘s market share in China rose slightly to 15.5% in the quarter even as its sales volumes dropped 5.8%, Counterpoint said, a smaller blow compared with Oppo, Xiaomi and Vivo.

IDC analyst Will Wong said that unlike in late 2020, when demand for phones in China surged after the first Covid lockdown, phone sales are expected to shrink.

“It’s not just the lockdown, but other factors, like the government tech crackdown and the slowdown on the property market, all have a negative effect on consumer sentiment,” he said.

Apple is set to release a new iPhone model in the autumn. But sales of the new device in China are unlikely to exceed those of last year’s iPhone 13, Canalys analyst Nicole Peng said.

“High-end phone sales tend to be resilient in China, but Apple may worry that demand itself is weakening.”

 

  • Reuters with additional editing by Jim Pollard

 

 

 

 

ALSO SEE:

 

China Smartphone Maker Oppo Evaded $551m in Tax, Says India

 

China Smartphones Lift Russia Share as Apple, Samsung Fall

 

Smartphone Shipments in China Down 32% in February

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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