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Apple to Focus on China, Roll Out AI iPhones to Revive Sales

iPhone sales, which make up about half of Apple’s revenue, are seen dropping 10.4% in the first three months of 2024

Customers are seen in an Apple store in China. The US tech giant is facing tougher challenges in smartphone sales in its top Asian market. Photo: Reuters
Customers are seen in an Apple store in China. The US tech giant is facing tougher challenges in smartphone sales in its top Asian market. Photo: Reuters


Apple executives are expected to announce a new focus on sales in China in a bid to revive their global fortunes.

The US tech giant is also thought to be planning to add generative AI to its iPhones to rebuild its sagging revenues, with it poised to report its biggest quarterly revenue decline in more than a year on Thursday.

Long considered a must-own stock on Wall Street, Apple shares have underperformed other Big Tech companies in recent months, falling more than 10% year to date as fears mount about its slow rollout of AI services and as a resurgent Huawei takes market share in China.

Analysts on average see iPhone sales, which account for about half of Apple’s revenue, falling 10.4% in the first three months of 2024, according to LSEG. That drop would be the steepest in more than three years.


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Observers also estimate Apple’s total revenue declined 5% in its second quarter, which included January through March. That would be Apple’s biggest revenue decline since the December-quarter of 2022, when revenue fell 5.5%.

Apple earlier this year lost the crown of the world’s most valuable company to Microsoft and its market value now stands at $2.68 trillion after the decline in its share price in 2024.

Weak revenue and falling shares have put pressure on Apple to spruce up its flagship device after years without major upgrades.

While executives at Microsoft, Alphabet, Meta Platforms and other major technology firms have talked up their AI strategies on quarterly conference calls in recent months, Apple CEO Tim Cook has discussed his plans for the emerging technology much less.

Adding AI features to iPhones could also help Apple to compete better with Huawei and Samsung Electronics, which reclaimed the title of the world’s top smartphone vendor from Apple earlier this year, driven by demand for the AI features in its Galaxy S24 smartphones.

“Replacement cycle tailwinds and incremental generative AI features set up Apple well for a strong iPhone 16 cycle,” Bernstein analyst Toni Sacconaghi said this week, upgrading his rating on the company’s shares to “outperform” from “market-perform”.

“We believe prevailing weakness in China is more cyclical than structural, and note historically Apple’s China business has exhibited much higher volatility than Apple overall, given its very feature-sensitive installed base.”


Revamped iPad Line-Up

Thursday’s earnings will also be watched closely for updates on the company’s stock buyback plan and the Vision Pro, Apple’s first major product in years that hit the shelves in February.

After initial enthusiasm, there have been signs that demand slowed for the $3,500 device, with an analyst saying this month that Apple has pulled back its production estimates for the mixed-reality headset.

The rest of the company’s hardware business is also reeling from soft demand, with iPads and Mac sales expected to fall 11.4% and 4.3%, respectively, in the March quarter.

Apple has signalled it is sharpening its focus on the devices, which have also been hobbled by a lack of major upgrades.

The company is hosting an event later this month where a revamped iPad line-up is expected to be unveiled and media reports have said that it plans to update every Mac model with faster, AI-focused M4 processors.

The services business – which includes money earned from App Store and subscription services such as Apple TV – is expected to remain a bright spot with revenue growth of 7.7%.


  • Reuters with additional editing by Sean O’Meara


Read more:

Huawei Takes Another Bite Out of Apple’s Market Share in China

China Orders Apple to Cut WhatsApp, Threads from App Store

Apple Eyes Indonesia Fab as it Reduces China Reliance – AP

Apple iPhone Sales Slump 10%, Samsung Claims No1 Spot

Apple CEO Cook in China, Meets Suppliers Amid Falling iPhone Sales



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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