Tim Cook Aims to Reassure Investors That iPhone Is Still Doing Well in China
Tim Cook, the CEO of Apple Inc., aimed to reassure investors on Wall Street that there is still a robust demand for iPhones in China. This comes as Apple faces challenges from the growing presence of Huawei Technologies Co. and an unpredictable business landscape for American companies in the country.
When Apple’s revenue in China was lower than some analysts predicted in the last quarter, Cook blamed weakness in its Mac and iPad businesses. The company also pointed to exchange rate fluctuations that reduced the value of money created in the region.
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Total revenue in China fell 2% year-over-year — a steeper drop than Apple experienced company-wide. And Apple shares were down more than 3% late Thursday.
But the iPhone continued to make inroads, Cook said. This included record sales in mainland China during the quarter. Different iPhone models make up the top four selling phones in urban China, he said.
“China is an incredibly important market,” Cook said on an earnings call with analysts. “And I’m very optimistic about that.”
Apple investors are jittery about the iPhone in China after the country expanded bans on the US technology in government workplaces. Shenzhen-based Huawei also introduced a new model that challenges the iPhone. And iPhone assembler Hon Hai Precision Industry Co. is being investigated by Chinese authorities in unspecified investigations that will create a new cloud for the business. During the call, Cook did not face direct questions from analysts about the situation.
The problems are central to Apple’s business. The iPhone is its flagship product, generating about half of its revenue, and China is its largest international market. The country also continues to serve as Apple’s manufacturing hub, although the company is moving more production to India and other locations.
The iPhone 15 went on sale on September 22nd – just about a week before the end of the quarter – so the latest results only give an early idea of how the device will perform. Investors will get a clearer picture when Apple reports its holiday results early next year. On Thursday, Apple forecast December quarter revenue to be flat – a sign that the Chinese market remains a question mark.
If China’s smartphone market is shrinking — as analysts have said — Apple’s results suggest it is gaining market share, Cook said. He also mentioned that the company is opening a new store in China this week. It will come to Wenzhou, Zhejiang Province and is in the company’s 46th district.
The Cupertino, Calif.-based company added that its services business also enjoyed record sales in the region.
Cook was just in China last month and said he “couldn’t be more excited” about his interactions with customers and employees.
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