The worse seems over for the Apple iPhone in China

The worse seems over for the Apple iPhone in China
Apple has had to put up with a number of headwinds that negatively affected sales of the Apple iPhone in China over the last year. One issue was the strength in the U.S. Dollar against the Chinese Yuan. This forced Apple to price its phones at a higher price in the country in order to maintain its profit margins. For example, the dollar's strength forced Apple to price its "more affordable" iPhone XR at a higher price than the Huawei Mate 20 Pro in the country. Apple tried to make up for the dollar's strength by cutting the wholesale prices of its handsets in China back in January.

Another issue that led to sluggish sales of the iPhone in China over the last few months is the U.S.-China trade war. No, the iPhone is not yet on the list of Chinese exports that are taxed once they land in a U.S. port. But the trade war has weakened the Chinese economy and that has hurt the sales performance of Apple's handsets in the country. And we can't forget the rise in nationalism that took place in China following the arrest in Canada of Huawei CFO Meng Wanzhou. The arrest was based on a U.S. warrant and there were immediate repercussions for Apple. Several businesses in China started subsidizing the purchase of smartphones made by Chinese manufacturers while fining those who purchased an iPhone.

During the calendar first quarter of 2019, Apple shipped 30% fewer iPhone units in China compared to the same quarter last year. Deliveries declined from 9.3 million phones in Q1 of 2018 to 6.5 million phones this year. That led to a drop in the company's market share in China during the first quarter from 10.2% to 7.4% year-over-year. But now things could be turning around. According to 24/7 Wall Street (via 9to5 Mac), UBS analyst Tim Arcuri says that iPhone sales in China declined 3% in April compared with the same month last year. That compares with the 61% year-over-year decline in Chinese iPhone shipments racked up in March. And for December, January, February and March, iPhone shipments in China plummeted by an average of 66% on an annual basis. The data comes from the analysis of monthly smartphone sell-through data from the Chinese government.

Apple iPhone shipments in China are piggybacking on overall improvement in the country

Arcuri notes that the iPhone replacement cycle is about 3 years in China, which should help continue Apple's turnaround in the world's largest smartphone market. So far, the analyst hasn't detected any backlash from President Donald Trump's escalation of the trade war. Just last week Trump hiked the tariffs on $250 billion worth of goods and threatened 25% tariffs on another $325 billion in goods from China. Still, Arcuri notes that supply chain checks have yet to show any signs of a slow down based on the tough talk and action coming out of the White House.

Besides cutting the wholesale price of the iPhone in China earlier this year, last month it cut the retail price of the iPhone in the country by as much as 6%. But that was because of China's decision to cut the value-added tax (VAT) for manufacturers in China to 13% from 16%.

In addition, the saying that a rising tide lifts all boats certainly applies here. In April, overall shipments of smartphones in China rose 6% after declining in 9 out of the previous 10 months. On a sequential basis, overall smartphone shipments rose 29% from March while iPhone shipments rose 19% from the same month.

Apple has seen all of its businesses struggle in China. For the fiscal second quarter, Apple reported $10.22 billion in Chinese revenue, down from $13.02 billion during the same quarter last year. That is a 22% decline.



1. almostdone

Posts: 450; Member since: Sep 25, 2012

If you say so PhoneArena. This year will be even worse for iPhone sales.

3. midan

Posts: 3124; Member since: Oct 09, 2017

It will be for the whole industry, it is expected.

4. TheOracle1

Posts: 2340; Member since: May 04, 2015

Apple's sales dropped more than anyone else last quarter. This is just wishful thinking from Phonearena. There are just too many excellent cheaper alternatives.

5. iloveapps

Posts: 909; Member since: Mar 21, 2019

Sales dropped but profit not. 1.4 billion active devices seems pretty good number and apple just need to lock them up thru great services

6. midan

Posts: 3124; Member since: Oct 09, 2017

"There are just too many excellent cheaper alternatives." Yes cheaper iPhones are great too, no need to buy the most expensive one. "Apple's sales dropped more than anyone else last quarter" well if you haven't noticed, but for most OEMs there's not much room to drop ;)

2. Whitedot

Posts: 868; Member since: Sep 26, 2017

So know it's Chinese nationalism to blame for weak iPhone sales.

13. jacky899

Posts: 431; Member since: May 16, 2017

Unlike other nationalities, Chinese nationalism is non existant. Chinese would buy turd if it was labeled with an American brand. The only thing holding back most Chinese frim buying an iphone is the price especially considering China's economy suffering severely from the trade war. This is where Chinese brands come in to grab market share due to their affordability and bang for the buck

7. TBomb

Posts: 1668; Member since: Dec 28, 2012

Hate to be a nitpicker, but I think it should be "The Worst Seems Over....." in the title.

8. TBomb

Posts: 1668; Member since: Dec 28, 2012

I'm thinking H2 2019/H1 2020 will be the year of Pixel 3a (and other cheap, but worthy phones). I'd rather buy a 3a, have it break in a year and then buy another one than buy a new $1000 phone every two years. I'd still be saving $200 over that time (at least) and I wouldn't be compromising much at all. I don't think the worst is over in China for Apple unless they can compete directly with the prices of the P3a and it's competition. But we'll have to wait until the Fall for that unless something comes out at WWDC in June.

10. Knownhost

Posts: 113; Member since: Nov 13, 2017

When you hit the bottom, the worst is indeed over.

12. Wazupmrg

Posts: 198; Member since: Apr 10, 2017

Hahahaha. Considering more tariffs coming, the lack of any type of true innovation, and growing competition from premium and mid range devices, don't bet on it

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