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Analysts Predict Apple Will Encounter Tepid Demand In China Following A Dip In Quarterly Revenue


29/07/2022


Analysts Predict Apple Will Encounter Tepid Demand In China Following A Dip In Quarterly Revenue
Some analysts warned on Friday that Apple should brace for a drop in Chinese demand as shoppers cut down on spending in anaemic conditions, following the iPhone maker's announcement that demand had risen in mid-June after COVID-19 lockdowns impeded sales.
 
The iPhone maker announced a 1 per cent drop in quarterly revenue in Greater China on Thursday, breaking a string of good quarters in the region.
 
Overall, Apple's sales increased by 2 per cent, exceeding expectations, and the company stated there was no decrease in worldwide demand for iPhones despite macroeconomic indications turning negative.
 
Apple CEO Tim Cook blamed the reduction in Greater China income on city-wide lockdowns in China, which drove millions to stay at home and harmed 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 time frame," he said.
 
China's rigorous COVID controls have hampered the world's second-largest economy's recovery, with consumer confidence at record lows, private investment faltering, and young unemployment at a record 19.3 per cent, prompting calls for more immediate government stimulus. more info
 
Apple announced this week discounts on iPhones and other products for Chinese customers, a move it makes when sales are poor.
 
Analysts believe the corporation is more shielded from a bad economy because it is the only leading brand supplying pricey devices.
 
Huawei, Apple's main high-end competitor, has seen sales plummet after US sanctions blocked it from sourcing essential components. Honor, a Huawei subsidiary, is rapidly expanding but has yet to penetrate into the high-end market.
 
According to Counterpoint Research, overall Chinese smartphone sales decreased 14.2 per cent year on year in April-June, with volumes reaching a decade low.
 
Apple's market share in China increased marginally to 15.5 per cent in the third quarter, despite a 5.8 per cent reduction in sales volumes, according to Counterpoint, a lesser drop when compared to Oppo, Xiaomi, and vivo.
 
According to IDC analyst Will Wong, unlike in late 2020, when demand for phones in China skyrocketed following the initial COVID shutdown, phone sales are projected to decline.
 
"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.
 
In the autumn, Apple plans to debut a new iPhone model.
 
However, according to Canalys analyst Nicole Peng, sales of the new smartphone in China are unlikely to eclipse those of last year's iPhone 13.
 
"High-end phone sales tend to be resilient in China, but Apple may worry that demand itself is weakening."
 
(Source:www.reuters.com)