China iPhone sales strong, Apple tells investors as Huawei threat looms By Reuters

© Reuters. FILE PHOTO: A woman looks at a new iPhone 15 Pro and a Huawei Mate 60 Pro as Apple’s new iPhone 15 officially goes on sale across China, at an Apple Store in Shanghai, China, September 22 2023. REUTERS/Aly Song/File Photo

By Yuvraj Malik and Stephen Nellis

(Reuters) – Apple said on Thursday that demand for its iPhones in China was strong, trying to reassure investors who fear it could lose ground to Huawei Technologies and other local smartphone makers.

“In mainland China, we set a quarterly record for the September quarter for iPhone,” Chief Executive Tim Cook told Reuters in an interview. “We had four of the five best-selling smartphones in urban areas in China.”

Apple (NASDAQ:) appears to have gained market share in China between July and September, even as the overall smartphone market contracted, it said in a conference call with analysts.

The company expects to sell more iPhones during the holiday quarter, even though this year’s quarter has one fewer week of sales than the previous year, Cook said.

Research firm Canalys estimated that overall smartphone sales in China fell 3% between July and September from a year earlier as consumers bought fewer smartphones due to an unstable economic recovery.

This is a slower rate of decline than in previous quarters, a sign that the market crisis has eased. iPhone sales in China fell 6%, Canalys said.

On the other hand, analysts believe that Huawei’s smartphone sales in China increased sharply during the quarter. Its Mate 60 Pro phone made headlines for using an advanced chip made in China, despite being constrained for years by debilitating US sanctions.

Apple said Thursday that its overall sales in China fell 2.5%, but it blamed struggling sales of Mac computers and iPads. Cook said sales there increased after taking into account exchange rates.

Apple’s sales in China fell in three of the four quarters of its 2023 fiscal year, which ended September 30.

Analysts said they remained optimistic about Apple’s demand prospects in China through the fourth quarter as there were signs that a rebound in the broader smartphone market was gathering pace.

Aggressive discounts on the iPhone 15 series ahead of the annual Singles Day shopping festival by major Chinese online retailers are also encouraging demand.

Although Apple occasionally allows supplier partners in China to offer discounts to stimulate demand, these retailers have also found themselves engaged in a “value for money” battle to win customers.

Over the past two weeks, platforms including JD (NASDAQ:).com, Pinduoduo (NASDAQ:), and Ali Baba (NYSE:) Taobao offered deep deals on iPhone 15 models, slashing prices up to 1,501 yuan ($205.14) below the retail price.

“While the latest iPhone series had underperformed in China during the launch quarter due to a shorter pre-holiday shopping period coupled with supply disparities on the Pro Max, it could see a improvement in the year-end quarter with strong sales event performance on 11.11,” research consultancy Counterpoint wrote in a note on Friday.

Apple’s comments follow upbeat comments from its chip supplier Qualcomm (NASDAQ:) on Wednesday, which signaled that a two-year slowdown in the smartphone market was easing, led by a recovery in China .

Qorvo (NASDAQ:), another supplier of Apple’s wireless connectivity chips, also said inventory levels at its Chinese customers were slowly declining and the company recorded its biggest quarter of reservations in more than two years .

Qualcomm also faces new competition from Huawei’s chips, but said Wednesday it does not expect Huawei’s re-entry into the market to affect its relationships with Chinese smartphone makers.

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